...Currency Depreciation – a concern for the Indian Economy The Indian Rupee has marked a significant depreciation against the US dollar marking a new risk for Indian Economy. Till the beginning of the current financial year very few had ever expected Rupee to depreciate to so low levels. On October 21, 2011, the rupee crossed Rs. 50/$ for the first time this year touching new lows of Rs.53.72/$ on 14th December 2011. What is even more interesting to note is that when other countries are trying to keep their currencies devalued, India is trying to prevent depreciation of its currency. As Indian currency has sharply depreciated not only against the US dollar, but also against the other currencies of the world, a myriad of factors can be associated with this devaluation of this currency. There are supposedly four factors behind the recent scenario: * Flight of foreign funds from the Indian market. * Slowdown in the capital inflows. * Higher global crude oil prices, which widens the current account deficit and also increase dollar buying by oil companies. * Recovery of US dollar. As the downbeat forces have played strong over the last few months, investor risk-appetite has contracted, thereby increasing the demand for safe haven such as US treasury, gold and the greenback. Secondly a prospective decline in inflows on the capital account of the balances of payments could further be associated with the depreciation in rupee. The most possible impact of the devaluation...
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...History of American Currency * * When the early English settlers came to America they carried small amounts of capital to trade amongst themselves. There is an account of John Winthrop who was a leading figure in the founding of the Massachusetts Bay Colony, in 1630 writing to his son telling him to bring 150 or 200 pounds with him. Later early settlers brought money to exchange for seed, cattle, and any form of capital the original colonies had already accumulated. During this time a married clergyman was allowed 30 pounds per year. Josias Plainstowe, having stolen four baskets of corn from the Indians needed to repay eight and be fined five pounds. Carpenters, sawyers, jointers, and bricklayers (whose service were at a high demand and was at a monopoly price) were forbidden to take over 12d and afterwards 2s per day). “In January 1631 the crops having failed in England, and no crop having been raised in Massachusetts Bay, grain was at famine prices. Including freight, wheat was 14s. per bushel, peas 10s. Indian corn from Virginia 10s. Many cattle died. A cow was worth 25 or 30 pounds.” * Before America’s independence the colonial economies struggled with the availability of money to go around. Colonial governments made attempts to solve the problem by using nails, tobacco, and animal pelts for currency, giving each a set amount of shillings or pennies so they could intermix with the pre existing system. “The most successful ad hoc currency was wampum, a particular...
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...Virtual currency is currency people can use to make payments in virtual environments like gaming and social networking sites. It is possible to earn it by completing tasks in the virtual environment or simply participating for a set period of time, and users can also buy it, converting real currency into virtual, usually at a very favorable exchange rate. Virtual currencies like Bitcoin, Ripple, Litecoin and others have developed rapidly these years. Compared with traditional currency, virtual currency differs in many aspects. However, will virtual currency be able to take over traditional currency in the future? Economists have different idea on this question. The essay is presenting the arguments that virtual currency will replace traditional currency and vise-versa. One argument comes from People.cn: Some virtual currencies have become independent currencies and no longer depend on sovereign currencies. With future development, virtual currencies will replace traditional currencies. (Can Virtual Currencies Strike the Real World? 2013) In this argument, the premise is some virtual currencies have become independent currencies and no longer depend on sovereign currencies. This premise is deniable. Virtual currencies are not independent by now. They still need the support of sovereign currencies. For an example, people use the real money to buy Bitcoin and store it in a digital wallet. Or by mining, people can get Bitcoin, but the real money is still necessary to buy...
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...Currency Forward DEFINITION OF 'CURRENCY FORWARD' A binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date. A currency forward is essentially a hedging tool that does not involve any upfront payment. The other major benefit of a currency forward is that it can be tailored to a particular amount and delivery period, unlike standardized currency futures. Currency forward settlement can either be on a cash or a delivery basis, provided that the option is mutually acceptable and has been specified beforehand in the contract. Currency forwards are over-the-counter (OTC) instruments, as they do not trade on a centralized exchange. Also known as an “outright forward.” INVESTOPEDIA EXPLAINS 'CURRENCY FORWARD' Unlike other hedging mechanisms such as currency futures and options contracts – which require an upfront payment for margin requirements and premium payments, respectively – currency forwards typically do not require an upfront payment when used by large corporations and banks. However, a currency forward has little flexibility and represents a binding obligation, which means that the contract buyer or seller cannot walk away if the “locked in” rate eventually proves to be adverse. Therefore, to compensate for the risk of non-delivery or non-settlement, financial institutions that deal in currency forwards may require a deposit from retail investors or smaller firms with whom they do not have a...
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...Assignment Currency Devaluation Introduction Devaluation refers to a decrease in a currency's value. A currency devalues when its value declines in relation to one or more other currencies. It affects the demand for exports and imports. Currency devaluation is evaluated in terms of the foreign exchange rate. Exchange rate is the value between two currencies shows how much one currency is worth in terms of other currency. The depth and intensity of exchange rate volatility and its impact on the volume of international trade was recognized during 1970s when the world economy shifted from fixed exchange rate to free floating exchange rate. If the exchange rate volatility is higher, then it will generate uncertainty of the future profit from export trade. In this assignment we will discuss on such issues like exchange rate volatility I addition to currency devaluation and its impact on the volume of international trade of developing country focusing Bangladesh. This assignment is based on the exchange rate and its volatility in addition to devaluation that affect on the on international trade of Bangladesh. The concept of the study is taken from the academic activity of ECN-201 course instructed by Mrs. Nahid ferdousi, lecturer of Department of Business Administration of University of Asia Pacific. This paper consists of three parts. In first part we will give a short description of currency valuation and factors that affects the currency valuation, and then we animated...
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...user screen shall have a short description telling the user how to use the program. 4. The calculation of the currency shall be executed only after all the valid input values are provided. 5. The program shall allow the user to clear all input fields and recomplete the calculation 6. Display the MENU for currency conversion 7. Allow user to select from MENU containing list of foreign currencies to be converted into US dollars. 8. Convert the currency amount entered into an equivalent amount of US dollars. 9. Calculate currency conversion using user supplied input values. 10. Display the currency amount entered by the user along with its US dollars equivalent. Input | Process | Output | Menu optionsName:Type:Range: | Display Menu | Menu OptionsName: Currency TypeType: IntegerRange: 1-6 | Menu choice currencyName: International ValueType: RealRange: 0-1,000,000 | Get Foreign Value | Menu choice currencyName: International ValueType: RealRange: 0-1,000,000 | Currency conversion Name: International ValueType: RealRange: 0-1,000,000Name: Currency TypeType: IntegerRange-1-6 | Convert currency | Equivalent US dollarName: Us ValueType: RealRange: > 0 | Name: Currency TypeType: IntegerRange: 1-6Name: International ValueType: RealRange: 0-1,000,000Name: US ValueType: RealRange: >0 | Display Results | Name: Currency TypeType: IntegerRange: 1-6Name: International ValueType: RealRange: 0-1,000,000Name: US ValueType: RealRange: >0...
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...imports and also capital inflow into the country due to the high interest rates. Since the government wanted to make Brazil competitive for exports, a weak currency would dissuade companies from exporting since they would earn less in revenue for every $ exported. Further with a free currency and no capital controls, the ease of investing and removing capital would make the Brazilian stock market (which as it is, is very small) more susceptible to foreign capital. b. Medium term (1-2 years)? In the medium term, the movement in the real would dependent on several factors such as: global sentiments, status of the euro crisis, relative attractiveness of other market (such as Mexico, Africa, South East Asia) etc., However it would be ideal if the real was stable in the range of R$2 +/- 10% This would ensure stability in the economy and capital markets. A strong currency would encourage imports while a weak currency would discourage investments. Further a weak currency would also make the corporates in Brazil nervous as they will need to pay more reals for every $ of debt on their books. Would these be adverse developments for Brazil? Why? I think it is important to have stability in the currency before allowing it to float freely. Brasil is still an emerging economy and needs to have a scrupulous approach to its currency & monetary policy. It not only needs foreign capital for development but also needs to have a balanced current account. Further given the financial crisis...
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... the dong deposit interest rate is 14 percent per annum. Therefore, it would be more profitable to deposit in dong than in dollar. On February 16, Vietcombank quoted its buy price at 20,810 dong per dollar and sale price at 20,870 dong per dollar, a decrease of 10 dong in comparison with the prices of the day before. At Asia Commercial Bank ACB, the quoted prices were 20,800-20,860 dong per dollar (buy and sale). On the black market, a foreign currency exchange shop on Ha Trung Street in Hanoi informed the prices at 20,800-20,830 dong per dollar, lower than the prices of the day before at 20,810-20,840 dong per dollar. Analysts have commented that the big gap between the dong and dollar interest rates and the promise to control the exchange rate fluctuation within 2-3 percent both have encouraged people to convert dollars for dong. On February 14, the State Bank announced that it has been buying foreign currencies, while the current favorable conditions have been facilitating the purchases. The bank said that the foreign currency liquidity of the banking system has improved since January 2012, while banks have sold more foreign...
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...of foreign currency to be converted 3. Select currency type to be converted to U.S dollars 4. Divide amount of currency by foreign currency rate Canadian dollars (rate: 1 U.S. dollar = 1.4680 Canadian dollars) Mexican pesos (rate: 1 U.S. dollar = 9.5085 pesos) English pounds (rate: 1.6433 U.S. dollars = 1 pound) Japanese yen (rate: 1 U.S. dollar = 104.9200 yen) French francs (rate: 1 U.S. dollar = 6.2561 francs) 5. Display conversion results |Input |Process |Output | |Amount of foreign currency |get user input |Amount of foreign currency | |Type of currency to be converted | |Type of currency to be converted | | | | | |Foreign currency amount |Divide Currency by foreign |Rate per U.S dollars | | |currency rate | | |Currency to be converted |Display foreign currency in|Amount of...
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...payment & the economic crisis faced by India forced India to adopt economic reforms. Government restrictions can often result in a currency with a low convertibility. For example, a government with low reserves of hard foreign currency often restrict currency convertibility because the government would not be in a position to intervene in the foreign exchange market (i.e. revalue, devalue) to support their own currency if and when necessary. Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.1 Currency Convertibility means the ability to freely exchange the currency of one Member State into the currency of another Member State. For example, a Barbadian should be able to easily purchase goods in a store in Port of Spain with his Barbadian dollars and receive his change in Trinidad and Tobago dollars. However, this does not always happen because of the existence of two different exchange systems in CARICOM – Fixed and Floating. Currency convertibility implies the absence of exchange controls or restrictions on foreign exchange transactions. The ease with which a country's currency can be converted into gold or another currency. Convertibility is extremely important for...
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...Cain was in a dilemma about what would happen to the value of CAD at the end of January when the company has to pay USD 7.5 million for licensing proprietary tools and software through a US company. In other words, she was worried about the effect the volatility in CAD would have on the company’s cash flows. Pixonix should hedge its USD position. In case if Pixonix does not hedge its USD liability, there is a possibility of it experiencing volatility in its cash flows. This could lead to two possible effects. First effect is that if CAD depreciates with respect to USD, Pixonix can make losses due to its unhedged currency exposure. On the other hand if CAD further appreciates with respect to USD (which is the more likely the case) then it will save on transaction costs of hedging and can benefit from the potential upside of CAD appreciation. Buying currency options is a more flexible form of hedging than setting up a foreign exchange contract. The instrument allows limited risk as in the case of non exercise of an option you only loose the option premium. Although options provide Pixonix with the flexibility it also has some...
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...Currency Conversion Design Eliseo M. Ortiz IT/210 March 31, 2013 Murthy Bhetanabhotla Currency Conversion Design Currency Conversion Design Assignment—Hierarchy Chart Currency Conversion Currency Conversion Get_Int_Value Get_Int_Value Display_Menu Display_Menu Display_Results Display_Results Convert_Currency Convert_Currency Currency Conversion Development Assignment—Flowcharts Control Flow Diagram—Main Control Begin Currency Amount Quit ? Thank You Currency to be converted Yes No Currency Rate Display Results End Begin Currency Amount Quit ? Thank You Currency to be converted Yes No Currency Rate Display Results End Control Flow Diagram—Display Menu Begin Currency Amount Valid selection ? Error 4 : Invalid menu selection No Yes End Quit ? Yes Selection is not valid Quit Verified ? Yes Currency Type Currency Converted No Conversion Verified ? No Yes No Begin Currency Amount Valid selection ? Error 4 : Invalid menu selection No Yes End Quit ? Yes Selection is not valid Quit Verified ? Yes Currency Type Currency Converted No Conversion Verified ? No Yes No | Control Flow Diagram—Get_Int_Value Selection is not valid Selection is not valid Selection is not valid Selection is not...
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...我国上市公司外汇风险暴露的行业特征研究 ——基于深市行业指数的实证分析 摘要 自2005年7月21日我国汇率形成机制改革以来，人民币持续升值，且波动幅度不断加大，加之中国参与国际贸易的程度不断加深，我国企业的外汇风险暴露问题也日益突出，引起国内外学者的广泛关注。本文结合前人的研究，从行业特征的角度出发，分析汇率波动给不同行业带来的影响有何差异，并结合实际分析造成这种差异的原因。 本文首先对外汇风险暴露的基本概念、分类以及衡量方法进行了理论性的介绍，然后从宏观和微观两个层面分析了企业外汇风险暴露的影响因子，并在此基础上提出了实证分析的基本假设，并利用Jorion的资本市场模型，运用深市行业指数数据，对人民币汇率波动对不同行业指数收益率的影响进行实证分析，结果表明：所选行业中有43%的行业存在着显著的外汇风险暴露，且系数均为正，说明这些行业受到人民币升值的负面冲击；竞争性行业的外汇风险暴露程度显著高于垄断性行业；制造业及其细分行业的外汇风险暴露水平整体高于其他行业，占所有风险暴露显著行业的56%；进口行业从人民币升值中的获益并不明显，出口行业则受到显著的负面冲击。 最后，本文结合我国现实情况分析了我国企业外汇风险暴露的行业特征的成因，发现我国制造业缺乏核心竞争力以及在国际分工中处于弱势地位是导致企业外汇风险暴露出现上述行业特征的主要原因。结合这些成因，本文从企业自身和外部市场条件两个方面提出了相应的对策和建议。 关键词：外汇风险暴露，汇率波动，股票收益，行业特征 Abstract Keywords: Currency exposure, security return, industry characteristics 目录 摘要 2 Abstract 3 1引言 5 1.1研究背景及意义 5 1.2国内外研究现状 6 1.3研究方法与步骤 8 2外汇风险暴露的理论分析 9 2.1外汇风险暴露的基本概念 9 2.2外汇风险暴露的分类 12 2.3外汇风险暴露的一般度量方法 14 2.4外汇风险暴露的影响因素 18 3 我国企业外汇风险暴露的行业特征的实证分析 21 3.1 基本模型和样本的选择 21 3.2 研究假设 22 3.3 实证结果及分析 23 4 结论及建议 25 4.1 研究结论 25 4.2 对策及建议 27 参考文献 30 1引言 1.1研究背景及意义 2005年7月21日，我国对完善人民币汇率形成机制进行改革。人民币汇率不再盯住单一美元，而是选择若干种主要货币组成一个货币篮子，同时参考一篮子货币计算人民币多边汇率指数的变化。实行以市场供求为基础、参考一篮子货币进行调节、有管理的浮动汇率制度。此后人民币兑美元的汇率不再保持稳定而是呈波动升值的趋势，自2005年7月的8.27一路升至2012年一月的6.31，累积升值幅度达23.7%。2012年4月14日，中国人民银行再次发表公告表示，银行间即期外汇市场人民币兑美元交易价浮动幅度由0.5%扩大至1%，外汇指定银行为客户提供当日美元最高现汇卖出价与最低现汇买入价之差不得超过当日汇率中间价的幅度由1%扩大至2%。这一举措有力地推动了人民币的市场化进程，促进人民币汇率的价格发现，为最终实现人民币汇率自由浮动奠定了基础。然而，扩大人民币对美元汇率的波动幅度同样也带来了很多的负面影响，增加了银行管理外汇资产的压力，也将使一些出口加工企业的汇率风险加大，同时，国际短期资本有可能大举外流。 ...
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...their local currencies to finance their operations? What risks were they exposing themselves to? Several factors affected the cause of Asian companies and banks borrowing foreign currencies. First, most Asian countries depended on exports as their engines of growth and development. The majority of these exports were destined to the shores of Japan and the United States. These exports include clothing, footwear, office machinery and telecommunications equipment to name a few. Because of this, most of the countries tied their currency to the dollar. This strategy worked out well until 1995, were low inflation and stability was in place. This strategy also boosted exports at the expense of Japan, as the dollar fell against the yen. This caused Japanese firms to shift their own production to East Asia in order to cope with the strengthening yen. A country’s export competitiveness depends on its exchange rate. This not only includes it being against the dollar, but also against its major competitor’s currencies. Because other currencies such as the dollar, yen and Deutsche mark carried lower interest rates, it was financially found advice for East Asian companies to finance themselves with those currencies. In total, they borrowed around $275 billion worth, much of it in short term loans. The key to understanding why East Asians borrowed from other currencies is in the interest rate level. It is also important to understand that many of the local currencies were pegged...
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...China is under pressure from US to devalue its currency. US believes that due to low value of Chinese Yuan, china is more competitive in exports vis-à-vis US and hence large trade deficits are leading to job losses in the US. However Chinese government claims China is a sovereign nation has the right to manage its currency and the low value of Yuan is actually helping US manage its budget deficit and by buying US treasury bills it was preventing the rise of US interest rates . Moreover many countries have also established their production base in China and hence any major fluctuations in the currency would hurt them. However this situation is potentially inflationary and will work only if the China is able to maintain a high growth rate. Moreover if dollar depreciates the Chinese government will have to write off its dollar assets in form of US treasury bills. China in recent past claims to have pegged its currency to a basket of international currency, but even then dollar carries maximum weight. China has also done mild revaluation and allowed daily fluctuations to the range of 0.3% to 0.05%. However the pressure from US persist even though some countries such as Japan and Korea have engaged in processing trade from China and thus benefitted from low Yuan and retaining greater value of trade for themselves. There are several options available to China: Revalue its currency: It is estimated that if China revalues its currency say from 3-5 % it is estimated that the exports...
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