Currency stability has been a recurring theme in IELTS Writing Task 2, appearing approximately 3-4 times annually in recent years. Historical analysis shows questions about government economic policies, including currency management, have featured prominently in Asian test centers, particularly in China, India, and Vietnam.
Understanding currency stability concepts in IELTS Writing Task 2
Analyzing the Task Question
Some people believe that governments should intervene to stabilize their national currency’s value, while others think the currency’s value should be determined by market forces. Discuss both views and give your opinion.
This question requires:
- Discussion of both perspectives on currency management
- Clear personal stance
- Relevant examples and explanations
- Balanced analysis
Band 8.5 Sample Essay
Financial markets have long debated whether governments should actively manage their currencies or allow market forces to determine exchange rates. While both approaches have their merits, I believe a balanced intervention strategy is most beneficial for economic stability.
Those who support government intervention argue that currency stability is crucial for economic planning and international trade. When central banks actively manage exchange rates, businesses can make long-term investments with greater confidence, knowing that sudden currency fluctuations won’t erode their profits. For instance, Japan’s intervention in the forex market has historically helped protect its export-oriented industries from excessive yen appreciation.
Conversely, proponents of free-floating exchange rates contend that market forces more efficiently determine a currency’s true value. They point to how excessive government intervention can lead to artificial valuations and eventual market corrections, as seen in the 1997 Asian Financial Crisis when several fixed exchange rate systems collapsed. Market-determined rates can also automatically adjust to economic changes, helping countries maintain competitiveness.
In my view, while pure market determination offers theoretical advantages, moderate government intervention is necessary for practical economic management. Countries like Singapore have successfully employed a managed float system, allowing market forces to operate within certain bounds while intervening to prevent excessive volatility. This approach combines the efficiency of market pricing with the stability needed for economic growth.
Band 6.5 Sample Essay
Nowadays, there is a big discussion about how governments should control their money value. Some people think governments must control it, but others say let the market decide. I will discuss both ideas and give my opinion.
Government control of money has some good points. First, it helps keep prices stable in the country. When money value changes too much, it’s hard for business people to plan their work. Also, government control stops big problems in the economy. For example, many Asian countries control their money to stay strong in world trade.
But some people say market forces are better. They think when governments don’t interfere, the money value becomes more natural. Sometimes when governments try to control too much, it makes bigger problems later. Like in some countries, when they try to keep their money strong, it suddenly becomes very weak and causes problems.
I think both sides have good points, but government control is better if done carefully. When governments watch the market and make small changes, it helps the economy stay healthy. But they should not try to control everything. A mix of both ways is probably best.
Analysis of Band Scores
Band 8.5 Essay Features:
- Sophisticated vocabulary and complex structures
- Clear organization with logical progression
- Relevant examples and thorough analysis
- Cohesive devices used effectively
- Balanced argument with clear position
Band 6.5 Essay Features:
- Basic vocabulary with some attempts at complex structures
- Simple but clear organization
- Limited examples and basic analysis
- Basic cohesive devices
- Position stated but less developed
Key Vocabulary
- intervention (n) /ˌɪntəˈvenʃn/ – active involvement in a situation
- fluctuation (n) /ˌflʌktʃuˈeɪʃn/ – irregular changes in level or amount
- forex market (n) /ˈfɒreks ˈmɑːkɪt/ – foreign exchange market
- volatility (n) /ˌvɒləˈtɪləti/ – tendency to change rapidly
- managed float (n) /ˈmænɪdʒd fləʊt/ – currency system with partial government control
- exchange rate (n) /ɪksˈtʃeɪndʒ reɪt/ – rate at which one currency can be exchanged for another
- monetary policy (n) /ˈmʌnɪtri ˈpɒləsi/ – government actions regarding money supply
The topic of currency stability remains crucial for IELTS candidates. Practice writing essays on related topics such as:
- Impact of digital currencies on traditional monetary systems
- Role of central banks in modern economies
- International trade and currency relationships
Share your practice essays in the comments for feedback and improvement suggestions.
