ABSTRACT
This chapter presents the effects of exchange rate changes on agricultural trade. It illustrates potential implications of several types of market interference. The importance of all countries' exchange rate changes for analysis of United Status (US) trade has been a blessing in disguise for the vulnerability of the United States to exchange rate changes. The US exchange rate with respect to many less-developed countries has remained quite stable. The build-up of foreign exchange reserves of the Organization of Petroleum Exporting Countries (OPEC) since 1974 has certainly complicated international finance. It is only through the skillful recycling of funds through international financial markets that OPEC can maintain the liquidity of many of her trading partners. Even with the highly inelastic domestic supply and demand curves, free markets imply that agricultural trade is quite sensitive to exchange rate changes.
