THE CHOICE OF EXCHANGE RATES AFTER THE WAR.

This article focuses on choice of exchange rates after the war. Policy concerning foreign exchange rates has to be subordinated to the general objectives of international economic policy. These have been clearly stated in official declarations and one of them is to make the currency of different countries again freely interchangeable. All experts of economics agree that in most countries, more or less stringent controls of the foreign exchange market will have to be maintained for some time after the war. The scope, stringency and duration of these controls will be discussed later and will partly depend on the rates which are chosen. Another partially conflicting objective of foreign exchange policy would be to influence the terms of trade. The realization of this objective would usually imply an overvaluation of the currency, because there is a strong presumption that the setting of a high level of a country's currency tends to improve the terms of trade and a low level tends to deteriorate them.