Impact of volatility of exchange rates of major currencies on foreign exchange management

Major currencies such as the dollar, yen and deutschmark, the dollar in particular, have fluctuated often and sharply in recent years. Their fluctuation has a significant impact on the developing countries' economies and their foreign exchange management in particular, which is the subject of this paper. Foreign exchange management involves foreign exchange reserves held by countries and their exchange rate policies. The two are interrelated, but are discussed separately here.