Lesson Plan

• Describe how speculative expectations can cause exchange‑rate movements.
• Explain the mechanisms (expectations, self‑fulfilling prophecies, liquidity, rapid reversal) by which speculators influence rates.
• Analyse a speculative attack scenario and identify the role of interest‑rate differentials.
• Evaluate the benefits and risks of speculation for economies and central banks.

• Projector and screen
• Whiteboard and markers
• Printed handout with the speculative‑attack flowchart
• Currency‑exchange rate charts (historical data)
• Case‑study worksheet (speculative attack example)
• Calculators

Begin with a recent headline about a currency plunge caused by traders betting on devaluation. Ask students what they already know about exchange rates and why they move. Explain that today they will uncover how speculation can trigger rapid fluctuations and how to spot its impact.

1. Do‑now (5'): Quick quiz on basic exchange‑rate concepts; collect answers.
2. Mini‑lecture (10'): Define speculation, introduce key mechanisms (expectations, self‑fulfilling, liquidity, rapid reversal).
3. Interactive case study (15'): Walk through the speculative‑attack scenario on Country A, using the flowchart; students annotate each step.
4. Group activity (10'): Analyse the “carry trade” using provided interest‑rate data; calculate potential profit.
5. Whole‑class discussion (10'): Compare benefits vs. risks of speculation; link to government responses.
6. Check for understanding (5'): Exit‑ticket – one sentence summarising how speculation can cause a currency devaluation.

Recap the four ways speculators move exchange rates and the role of interest‑rate differentials. Collect exit‑tickets and highlight any misconceptions. For homework, students research a real‑world speculative attack (e.g., the 1992 ERM crisis) and prepare a brief summary.