Ethiopian Business Review

Managing Ethiopia's Currency Problem

Economists understand the exchange rate of currencies just as they understand the price of any other commodities. In the foreign exchange market, the goods that are traded are currencies and their prices are the exchange rates. This means, just as with the price of any good or service, the exchange rate is primarily determined by demand and supply.

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Before the threat of a US-China trade war arose, surging stock markets and corporate profits had obscured the fact that the global economic system is under existential stress. Global financial stability remains considerably in doubt. Indeed, as world financial leaders gather for the annual IMF/World Bank spring conference in Washington, DC, the rapid pace of technological change and rising inequality are fueling ever louder calls for root-and-branch revision of the entire system.

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Excise taxes are commonly referred as indirect taxes. Because they are a type of narrow based taxes, they can be collected by the government in several instances, during production or distribution, as opposed to direct taxes such as personal and profit tax, which are imposed on individuals and companies. Excise taxes are also levied on specific commodities such as luxury goods, whose demand remain unchanged irrespective of their prices. 

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