ABSTRACT
After World War II, a new international monetary system was established whose most important component was a gold standard in disguise. However, this system came to an end in the early 1970s, mainly because of the pressure of the political and economic situation in the US. Its end, however, has paved the way for a new era for the global foreign exchange market. It is the era of freely floating exchange rates. In this new era, one of the leading concerns of economists has been to find a reliable and accurate model of exchange rate movements. However, after efforts of many years and myriad studies, we are still unable to predict the exchange rates better than a coin-flip model (also known as the driftless random walk model).
