The document discusses exchange rate regimes and how governments can manage exchange rates. There are two main types of exchange rate regimes: fixed rates, where a government keeps a currency at a target rate against another, and floating rates, where the market determines the exchange rate. To maintain a fixed rate, governments can intervene in currency markets, adjust interest rates, and impose exchange controls. While fixed rates provide certainty, they require giving up monetary policy flexibility and independence.
This document discusses Indonesia's exchange rate policies following the 1997 Asian financial crisis. It summarizes that Indonesia moved from a managed floating exchange rate regime prior to the crisis to a free floating exchange rate regime in July 1997 after the rupiah drastically depreciated during the crisis. The central bank could no longer maintain the rupiah's value. Since 2005, Indonesia has adopted an inflation targeting monetary policy framework to support the free floating exchange rate. The document also reviews debates around optimal exchange rate regimes and considerations for policymakers.
Evaluating The Merits And Demerits Of Fixed And Floating...Angela Williams
This document discusses fixed and floating exchange rate regimes. It provides examples of the 2008 US financial crisis to illustrate how the US benefited from a floating exchange rate, and the 1929 stock market crash to show how the US economy suffered from excessive speculation under a floating rate. Similarly, it discusses dangers of speculation during the 1929 crash and Argentina's 2001 emerging market crisis to analyze fixed exchange rates. In general, floating rates provide more adaptability but can lead to instability and speculation, while fixed rates offer stability but reduce independence.
1) While fixed exchange rates provided stability after WWII, they collapsed as capital markets evolved and countries faced speculative attacks. Many developing countries still use fixed rates pegged to the dollar or euro.
2) Floating exchange rates allow independent monetary policy but introduce unpredictable volatility. Developed countries mostly use floating rates as their economies strengthen.
3) The debate continues on whether fixed or floating rates are superior, as countries transition between regimes and sometimes struggle, showing the challenges of both approaches. Effective management is key to success with floating rates.
The document provides an overview of the international monetary system. It discusses the key features and issues with different exchange rate systems such as free float, managed float, target zones, and fixed rates. It outlines the history of international monetary systems including the gold standard, Bretton Woods system, and the move to floating exchange rates after 1971. The roles of the IMF and World Bank in providing stability and assistance to member countries are also summarized.
The document discusses the foreign exchange market. It provides background on the history of currency exchange beginning in ancient times. It then summarizes key aspects of the modern foreign exchange market, including that it consists of both wholesale and retail tiers, involves spot and forward transactions between various participants, and uses quotations structured as bids and asks with spreads. The market is unique due to its massive daily trading volume, global nature, and around the clock operations.
The chapter discusses the development of the international monetary system from the Bretton Woods Conference in 1944. Key points:
- Countries realized after WWII that political freedom alone was insufficient and economic cooperation was needed for development.
- The Bretton Woods Conference established the IMF to oversee the new monetary system based on fixed exchange rates and use of the US dollar and gold standard.
- The system helped sustain trade growth but faced challenges of debt crises and fluctuations caused by moving to floating exchange rates in the 1970s. The balance of payments tracks a country's total economic relations internationally through trade, investment, aid and other flows.
The history of international monetary systemSuleyman Ally
The document discusses the history and evolution of international monetary systems from 1816 to present. It describes the gold standard system from 1816-1914, the Bretton Woods system from 1945-1971, and modern exchange rate regimes. The gold standard linked currencies to gold, while the Bretton Woods system established a US dollar-backed system. Countries now choose between fixed exchange rates, where a currency is pegged to another, or floating rates, where the market determines a currency's value.
The document discusses exchange rate regimes and how governments can manage exchange rates. There are two main types of exchange rate regimes: fixed rates, where a government keeps a currency at a target rate against another, and floating rates, where the market determines the exchange rate. To maintain a fixed rate, governments can intervene in currency markets, adjust interest rates, and impose exchange controls. While fixed rates provide certainty, they require giving up monetary policy flexibility and independence.
This document discusses Indonesia's exchange rate policies following the 1997 Asian financial crisis. It summarizes that Indonesia moved from a managed floating exchange rate regime prior to the crisis to a free floating exchange rate regime in July 1997 after the rupiah drastically depreciated during the crisis. The central bank could no longer maintain the rupiah's value. Since 2005, Indonesia has adopted an inflation targeting monetary policy framework to support the free floating exchange rate. The document also reviews debates around optimal exchange rate regimes and considerations for policymakers.
Evaluating The Merits And Demerits Of Fixed And Floating...Angela Williams
This document discusses fixed and floating exchange rate regimes. It provides examples of the 2008 US financial crisis to illustrate how the US benefited from a floating exchange rate, and the 1929 stock market crash to show how the US economy suffered from excessive speculation under a floating rate. Similarly, it discusses dangers of speculation during the 1929 crash and Argentina's 2001 emerging market crisis to analyze fixed exchange rates. In general, floating rates provide more adaptability but can lead to instability and speculation, while fixed rates offer stability but reduce independence.
1) While fixed exchange rates provided stability after WWII, they collapsed as capital markets evolved and countries faced speculative attacks. Many developing countries still use fixed rates pegged to the dollar or euro.
2) Floating exchange rates allow independent monetary policy but introduce unpredictable volatility. Developed countries mostly use floating rates as their economies strengthen.
3) The debate continues on whether fixed or floating rates are superior, as countries transition between regimes and sometimes struggle, showing the challenges of both approaches. Effective management is key to success with floating rates.
The document provides an overview of the international monetary system. It discusses the key features and issues with different exchange rate systems such as free float, managed float, target zones, and fixed rates. It outlines the history of international monetary systems including the gold standard, Bretton Woods system, and the move to floating exchange rates after 1971. The roles of the IMF and World Bank in providing stability and assistance to member countries are also summarized.
The document discusses the foreign exchange market. It provides background on the history of currency exchange beginning in ancient times. It then summarizes key aspects of the modern foreign exchange market, including that it consists of both wholesale and retail tiers, involves spot and forward transactions between various participants, and uses quotations structured as bids and asks with spreads. The market is unique due to its massive daily trading volume, global nature, and around the clock operations.
The chapter discusses the development of the international monetary system from the Bretton Woods Conference in 1944. Key points:
- Countries realized after WWII that political freedom alone was insufficient and economic cooperation was needed for development.
- The Bretton Woods Conference established the IMF to oversee the new monetary system based on fixed exchange rates and use of the US dollar and gold standard.
- The system helped sustain trade growth but faced challenges of debt crises and fluctuations caused by moving to floating exchange rates in the 1970s. The balance of payments tracks a country's total economic relations internationally through trade, investment, aid and other flows.
The history of international monetary systemSuleyman Ally
The document discusses the history and evolution of international monetary systems from 1816 to present. It describes the gold standard system from 1816-1914, the Bretton Woods system from 1945-1971, and modern exchange rate regimes. The gold standard linked currencies to gold, while the Bretton Woods system established a US dollar-backed system. Countries now choose between fixed exchange rates, where a currency is pegged to another, or floating rates, where the market determines a currency's value.
This document provides an overview of international economics and the balance of payments. It discusses:
1) The balance of payments accounts record international transactions and whether an economy is a net lender or borrower based on current and capital account balances.
2) Historically, exchange rates were fixed under the Bretton Woods system but countries now choose between fixed and floating rates.
3) Exchange rates affect trade by determining the prices of internationally traded goods and services. Fluctuations impact producers and financial asset holders.
2. IB UNIT 3 - INTERNATIONAL MONETARY SYSTEM .pptxShudhanshuBhatt1
This PPT deals with
The International Monetary System which refers to the framework of rules, institutions, and procedures that govern international financial transactions and exchange rate arrangements among countries.
International monetary system and foreign exchangeNeha Suman
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
This document provides an outline for a chapter that discusses the determination of exchange rates. It begins by introducing the International Monetary Fund (IMF) and its role in exchange rate policy. It then examines the various exchange rate regimes that countries use, including pegged, floating, and managed floats. It discusses factors that influence exchange rates such as purchasing power parity and interest rates. The chapter also explores how managers can forecast exchange rate movements and how fluctuations impact business decisions.
3. From Capital Controls To Dollarization American Hegemony And The US DollarDaniel Wachtel
This document discusses dollarization in Latin America and its implications. It makes two key points:
1) Dollarization does not necessarily lead to smooth balance of payments adjustment in emerging markets. Instability and economic crises could increase with the loss of independent monetary policy.
2) The collapse of Bretton Woods increased US economic hegemony through a more widespread use of the US dollar internationally. Countries in Latin America extensively use dollars beyond international transactions.
13. From Capital Controls To Dollarization American Hegemony And The US DollarKayla Jones
This document discusses dollarization and the role of the US dollar in international markets. It makes two key points:
1) Dollarization does not necessarily lead to smooth balance of payments adjustment in peripheral economies. Instability and economic contraction are possible outcomes as these countries lose the ability to use currency devaluation to correct deficits.
2) The collapse of Bretton Woods increased US economic hegemony and the global role of the US dollar. This has been actively pursued by the US to maintain advantages like persistent trade deficits. Dollarization became more widespread after Bretton Woods.
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
FIN 534 Week 10 Multinational Financial ManagementSlide 1Intr.docxssuser454af01
FIN 534 Week 10: Multinational Financial Management
Slide 1
Introduction
Welcome to Financial Management. In this lesson we will discuss multinational financial management.
Next slide
Slide 2
Topics
The following topics will be covered in this lesson:
Multinational, or global, corporations;
Multinational versus domestic financial management;
Exchange rates;
Exchange rates and international trade;
The international monetary system and exchange rate policies;
Trading in foreign exchange;
Interest rate parity;
Purchasing power parity;
Inflation, interest rates, exchange rates;
International money and capital markets;
Multinational capital budgeting;
International capital structures; and
Multinational working capital management.
Next slide
Slide 3
Multinational, or Global, Corporations
When the firm operates in another country it faces issues that it doesn’t face in its domestic country. Any time we talk about the firm operating in a foreign country we refer to it as a multinational, transnational or global corporation and these terms are used interchangeably. Firms choose to locate in a foreign country for a variety of reasons.
First, the firm wants to broaden its markets. This usually happens when the domestic market becomes saturated.
Second the firm may want to ensure a source of raw materials.
Third the firm may need a new form of technology.
Fourth it may shift production to a lower – cost country.
Fifth, the firm may want to avoid political and regulatory issues in its home country.
And sixth, the firm may want to diversify so it can have a cushion against any adverse impact of changing economic conditions in any one country.
Next slide
Slide 4
Multinational versus Domestic Financial Management
The concepts and procedures we’ve studied up to this point apply to domestic as well as multinational operations. There are however, six major factors that distinguish financial management in a purely domestic firm from one that operates globally.
First the global firm is affected by exchange rates because cash flows are denominated in different currencies.
Second, since each country has its own economic and legal systems it can make it difficult for the firm to deploy resources and make it difficult for executives trained in one country to move to another.
Third, language differences make it difficult to communicate.
Fourth, different countries have different cultural differences that shape the values and influence the firm’s ability to conduct business.
Fifth, sometimes in foreign countries governments negotiate directly with the firm. In this way, the marketplace does not determine the terms of trade on which transactions are determined.
And sixth, a foreign country may place restrictions or expropriate assets within its boundaries. This is referred to as political risk and it varies from country to country. Terrorism is another form of political risk faced by the global firm.
Next slide
Slide 5
Exchan ...
Foreign exchange involves the conversion of one country's currency into another's. It occurs in foreign exchange markets where currencies are bought and sold. The exchange rate is the rate at which one currency can be exchanged for another. There are three main types of exchange rate systems: fixed rates which maintain stability but lack flexibility, floating rates which are determined by market forces, and managed rates which permit some government influence. The purchasing power parity theory holds that exchange rates will adjust over the long run to equalize the purchasing power of currencies, while the balance of payments theory cites a country's trade flows and financial account as determining exchange rate supply and demand.
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
The document provides an overview of the international monetary system and the Bretton Woods system established after World War II. It discusses:
1) The establishment of the IMF and World Bank at the 1944 Bretton Woods Conference to regulate international monetary affairs and promote post-war reconstruction.
2) Key aspects of the Bretton Woods system including fixed exchange rates pegged to the US dollar, which was convertible to gold, and the ability for countries to adjust pegged rates with IMF approval.
3) Challenges that emerged over time including the US inability to maintain the dollar's peg as the world economy outgrew the fixed gold supply, leading to the system's collapse in the early 1970
This document discusses accounting for foreign currency transactions and hedging. It provides definitions of key terms related to foreign currency transactions and hedging instruments like forward contracts and options. It explains how foreign currency risk arises for multinational companies and how these companies use hedging derivatives to mitigate this risk. The document also summarizes regulations from the FASB and IASB around accounting for hedging derivatives and where related financial information should be presented in financial statements.
This document discusses tariffs, quotas, and exchange controls. It provides information on the advantages and disadvantages of quotas, noting they can protect infant industries but lead to higher prices when used by multiple countries. Exchange controls are then defined as government restrictions on foreign currency transactions used to manage a country's currency and balance of payments. Various exchange control methods like blocked accounts and multiple exchange rates are outlined. The document also discusses factors that can cause imbalance in a country's balance of payments and measures to correct such imbalances, including exchange rate systems.
This document discusses different types of exchange rate systems that governments use to control or influence currency exchange rates. It describes fixed exchange rate systems, where rates are kept constant; freely floating systems, where rates are set by market forces; managed float systems, where rates generally float but governments may periodically intervene; and pegged systems, where a currency's value is tied to another currency. It provides examples of countries that use different systems and discusses advantages and disadvantages of each approach.
The Foreign Exchange Management Act (FEMA) was introduced in 1999 to replace the earlier Foreign Exchange Regulation Act (FERA). FEMA came into effect on June 1, 2000 with the main objectives of consolidating foreign exchange laws, facilitating external trade and payments, and promoting an orderly foreign exchange market in India. FEMA applies throughout India and also to Indian residents' overseas offices and agencies. It aims to revise foreign exchange laws, encourage external trade and payments, and develop an orderly foreign exchange market in India through proper implementation and supervision.
Foreign Exchange Intervention and Currency Crisis (The Case of Korea During P...K Developedia
Title: Foreign exchange intervention and currency crisis
Sub Title: The case of Korea during pre-crisis period
Material Type: Report
Author: Kang, Sung-Kyung
Publisher: KDI School of Public Policy and Management
Date: 2000
Pages: 69
Subject Country: South Korea (Asia and Pacific)
Language: English
File Type: Documents
Original Format: pdf
Subject: Economy; Macroeconomics
Holding: KDI School of Public Policy and Management
Currency Substitution, Dollarisation and Possibility of De-Dollarisation in Z...IOSR Journals
This document summarizes currency substitution and dollarization in Zimbabwe. It discusses how Zimbabwe abandoned its local currency, the Zimbabwean dollar, in 2009 after it was ravaged by hyperinflation topping 231 million percent. This led to full dollarization, with the economy adopting foreign currencies like the US dollar. The document examines the journey of the Zimbabwean dollar until its disappearance, the causes of currency substitution like high inflation, and the possibility of reintroducing the Zimbabwean dollar in the future. It analyzes the economic instability in Zimbabwe through charts showing declining GDP growth and skyrocketing inflation rates that weakened the domestic currency.
Economic project on foreign exchange for m.com part 1 Anjali Modi
The document discusses the foreign exchange market. It begins with a brief history, noting that modern foreign exchange markets originated in 1973 but that currency exchange has occurred for millennia. It then provides definitions and explanations of key terms like foreign exchange, foreign exchange market, and why the foreign exchange market is unique due to its enormous daily trading volume representing trillions of dollars worth of transactions. The document also outlines the major participants in the foreign exchange market and the types of transactions that occur.
Navigating the world of forex trading can be challenging, especially for beginners. To help you make an informed decision, we have comprehensively compared the best forex brokers in India for 2024. This article, reviewed by Top Forex Brokers Review, will cover featured award winners, the best forex brokers, featured offers, the best copy trading platforms, the best forex brokers for beginners, the best MetaTrader brokers, and recently updated reviews. We will focus on FP Markets, Black Bull, EightCap, IC Markets, and Octa.
Best Competitive Marble Pricing in Dubai - ☎ 9928909666Stone Art Hub
Stone Art Hub offers the best competitive Marble Pricing in Dubai, ensuring affordability without compromising quality. With a wide range of exquisite marble options to choose from, you can enhance your spaces with elegance and sophistication. For inquiries or orders, contact us at ☎ 9928909666. Experience luxury at unbeatable prices.
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Similar a Factors that Influence Exchange Rates (IBM) by Group.pdf
This document provides an overview of international economics and the balance of payments. It discusses:
1) The balance of payments accounts record international transactions and whether an economy is a net lender or borrower based on current and capital account balances.
2) Historically, exchange rates were fixed under the Bretton Woods system but countries now choose between fixed and floating rates.
3) Exchange rates affect trade by determining the prices of internationally traded goods and services. Fluctuations impact producers and financial asset holders.
2. IB UNIT 3 - INTERNATIONAL MONETARY SYSTEM .pptxShudhanshuBhatt1
This PPT deals with
The International Monetary System which refers to the framework of rules, institutions, and procedures that govern international financial transactions and exchange rate arrangements among countries.
International monetary system and foreign exchangeNeha Suman
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
This document provides an outline for a chapter that discusses the determination of exchange rates. It begins by introducing the International Monetary Fund (IMF) and its role in exchange rate policy. It then examines the various exchange rate regimes that countries use, including pegged, floating, and managed floats. It discusses factors that influence exchange rates such as purchasing power parity and interest rates. The chapter also explores how managers can forecast exchange rate movements and how fluctuations impact business decisions.
3. From Capital Controls To Dollarization American Hegemony And The US DollarDaniel Wachtel
This document discusses dollarization in Latin America and its implications. It makes two key points:
1) Dollarization does not necessarily lead to smooth balance of payments adjustment in emerging markets. Instability and economic crises could increase with the loss of independent monetary policy.
2) The collapse of Bretton Woods increased US economic hegemony through a more widespread use of the US dollar internationally. Countries in Latin America extensively use dollars beyond international transactions.
13. From Capital Controls To Dollarization American Hegemony And The US DollarKayla Jones
This document discusses dollarization and the role of the US dollar in international markets. It makes two key points:
1) Dollarization does not necessarily lead to smooth balance of payments adjustment in peripheral economies. Instability and economic contraction are possible outcomes as these countries lose the ability to use currency devaluation to correct deficits.
2) The collapse of Bretton Woods increased US economic hegemony and the global role of the US dollar. This has been actively pursued by the US to maintain advantages like persistent trade deficits. Dollarization became more widespread after Bretton Woods.
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
FIN 534 Week 10 Multinational Financial ManagementSlide 1Intr.docxssuser454af01
FIN 534 Week 10: Multinational Financial Management
Slide 1
Introduction
Welcome to Financial Management. In this lesson we will discuss multinational financial management.
Next slide
Slide 2
Topics
The following topics will be covered in this lesson:
Multinational, or global, corporations;
Multinational versus domestic financial management;
Exchange rates;
Exchange rates and international trade;
The international monetary system and exchange rate policies;
Trading in foreign exchange;
Interest rate parity;
Purchasing power parity;
Inflation, interest rates, exchange rates;
International money and capital markets;
Multinational capital budgeting;
International capital structures; and
Multinational working capital management.
Next slide
Slide 3
Multinational, or Global, Corporations
When the firm operates in another country it faces issues that it doesn’t face in its domestic country. Any time we talk about the firm operating in a foreign country we refer to it as a multinational, transnational or global corporation and these terms are used interchangeably. Firms choose to locate in a foreign country for a variety of reasons.
First, the firm wants to broaden its markets. This usually happens when the domestic market becomes saturated.
Second the firm may want to ensure a source of raw materials.
Third the firm may need a new form of technology.
Fourth it may shift production to a lower – cost country.
Fifth, the firm may want to avoid political and regulatory issues in its home country.
And sixth, the firm may want to diversify so it can have a cushion against any adverse impact of changing economic conditions in any one country.
Next slide
Slide 4
Multinational versus Domestic Financial Management
The concepts and procedures we’ve studied up to this point apply to domestic as well as multinational operations. There are however, six major factors that distinguish financial management in a purely domestic firm from one that operates globally.
First the global firm is affected by exchange rates because cash flows are denominated in different currencies.
Second, since each country has its own economic and legal systems it can make it difficult for the firm to deploy resources and make it difficult for executives trained in one country to move to another.
Third, language differences make it difficult to communicate.
Fourth, different countries have different cultural differences that shape the values and influence the firm’s ability to conduct business.
Fifth, sometimes in foreign countries governments negotiate directly with the firm. In this way, the marketplace does not determine the terms of trade on which transactions are determined.
And sixth, a foreign country may place restrictions or expropriate assets within its boundaries. This is referred to as political risk and it varies from country to country. Terrorism is another form of political risk faced by the global firm.
Next slide
Slide 5
Exchan ...
Foreign exchange involves the conversion of one country's currency into another's. It occurs in foreign exchange markets where currencies are bought and sold. The exchange rate is the rate at which one currency can be exchanged for another. There are three main types of exchange rate systems: fixed rates which maintain stability but lack flexibility, floating rates which are determined by market forces, and managed rates which permit some government influence. The purchasing power parity theory holds that exchange rates will adjust over the long run to equalize the purchasing power of currencies, while the balance of payments theory cites a country's trade flows and financial account as determining exchange rate supply and demand.
International Monetary System: The International Financial System - Reform of International Monetary Affairs
- The Bretton Wood System and the International Monetary Fund, Controversy over Regulation of International
Finance, Developing Countries' Concerns, Exchange Rate Policy of Developing Economies.
The document provides an overview of the international monetary system and the Bretton Woods system established after World War II. It discusses:
1) The establishment of the IMF and World Bank at the 1944 Bretton Woods Conference to regulate international monetary affairs and promote post-war reconstruction.
2) Key aspects of the Bretton Woods system including fixed exchange rates pegged to the US dollar, which was convertible to gold, and the ability for countries to adjust pegged rates with IMF approval.
3) Challenges that emerged over time including the US inability to maintain the dollar's peg as the world economy outgrew the fixed gold supply, leading to the system's collapse in the early 1970
This document discusses accounting for foreign currency transactions and hedging. It provides definitions of key terms related to foreign currency transactions and hedging instruments like forward contracts and options. It explains how foreign currency risk arises for multinational companies and how these companies use hedging derivatives to mitigate this risk. The document also summarizes regulations from the FASB and IASB around accounting for hedging derivatives and where related financial information should be presented in financial statements.
This document discusses tariffs, quotas, and exchange controls. It provides information on the advantages and disadvantages of quotas, noting they can protect infant industries but lead to higher prices when used by multiple countries. Exchange controls are then defined as government restrictions on foreign currency transactions used to manage a country's currency and balance of payments. Various exchange control methods like blocked accounts and multiple exchange rates are outlined. The document also discusses factors that can cause imbalance in a country's balance of payments and measures to correct such imbalances, including exchange rate systems.
This document discusses different types of exchange rate systems that governments use to control or influence currency exchange rates. It describes fixed exchange rate systems, where rates are kept constant; freely floating systems, where rates are set by market forces; managed float systems, where rates generally float but governments may periodically intervene; and pegged systems, where a currency's value is tied to another currency. It provides examples of countries that use different systems and discusses advantages and disadvantages of each approach.
The Foreign Exchange Management Act (FEMA) was introduced in 1999 to replace the earlier Foreign Exchange Regulation Act (FERA). FEMA came into effect on June 1, 2000 with the main objectives of consolidating foreign exchange laws, facilitating external trade and payments, and promoting an orderly foreign exchange market in India. FEMA applies throughout India and also to Indian residents' overseas offices and agencies. It aims to revise foreign exchange laws, encourage external trade and payments, and develop an orderly foreign exchange market in India through proper implementation and supervision.
Foreign Exchange Intervention and Currency Crisis (The Case of Korea During P...K Developedia
Title: Foreign exchange intervention and currency crisis
Sub Title: The case of Korea during pre-crisis period
Material Type: Report
Author: Kang, Sung-Kyung
Publisher: KDI School of Public Policy and Management
Date: 2000
Pages: 69
Subject Country: South Korea (Asia and Pacific)
Language: English
File Type: Documents
Original Format: pdf
Subject: Economy; Macroeconomics
Holding: KDI School of Public Policy and Management
Currency Substitution, Dollarisation and Possibility of De-Dollarisation in Z...IOSR Journals
This document summarizes currency substitution and dollarization in Zimbabwe. It discusses how Zimbabwe abandoned its local currency, the Zimbabwean dollar, in 2009 after it was ravaged by hyperinflation topping 231 million percent. This led to full dollarization, with the economy adopting foreign currencies like the US dollar. The document examines the journey of the Zimbabwean dollar until its disappearance, the causes of currency substitution like high inflation, and the possibility of reintroducing the Zimbabwean dollar in the future. It analyzes the economic instability in Zimbabwe through charts showing declining GDP growth and skyrocketing inflation rates that weakened the domestic currency.
Economic project on foreign exchange for m.com part 1 Anjali Modi
The document discusses the foreign exchange market. It begins with a brief history, noting that modern foreign exchange markets originated in 1973 but that currency exchange has occurred for millennia. It then provides definitions and explanations of key terms like foreign exchange, foreign exchange market, and why the foreign exchange market is unique due to its enormous daily trading volume representing trillions of dollars worth of transactions. The document also outlines the major participants in the foreign exchange market and the types of transactions that occur.
Navigating the world of forex trading can be challenging, especially for beginners. To help you make an informed decision, we have comprehensively compared the best forex brokers in India for 2024. This article, reviewed by Top Forex Brokers Review, will cover featured award winners, the best forex brokers, featured offers, the best copy trading platforms, the best forex brokers for beginners, the best MetaTrader brokers, and recently updated reviews. We will focus on FP Markets, Black Bull, EightCap, IC Markets, and Octa.
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Stone Art Hub offers the best competitive Marble Pricing in Dubai, ensuring affordability without compromising quality. With a wide range of exquisite marble options to choose from, you can enhance your spaces with elegance and sophistication. For inquiries or orders, contact us at ☎ 9928909666. Experience luxury at unbeatable prices.
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[To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
This PowerPoint compilation offers a comprehensive overview of 20 leading innovation management frameworks and methodologies, selected for their broad applicability across various industries and organizational contexts. These frameworks are valuable resources for a wide range of users, including business professionals, educators, and consultants.
Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
11. Strategyn’s Jobs-To-Be-Done (JTBD) Framework with Job Map
12. Design Sprint Framework
13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations
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2. INTRODUCTION
As we learned in Chapter 9, an exchange rate represents the
number of units of one currency needed to acquire one unit of
another. Although this definition seems simple, managers must
understand how governments set an exchange rate and what
causes it to change. Such understanding can help them anticipate
exchange-rate changes and make decisions about business
factors that are sensitive to those changes, such as the sourcing of
raw mate- rials and components, the placement of manufacturing
and assembly, and the choice of final markets
3. THE
INTERNATIONAL
MONETARY
FUND
In 1944, toward the close of World
War II, the major Allied
governments met in Bretton
Woods, New Hampshire, to
determine what was needed to
bring economic stability and
growth to the postwar world. As a
result of those meetings, the
International Monetary Fund (IMF)
came into official existence on
December 27, 1945, with the goal
of promot- ing exchange-rate
stability and facilitating the
international flow of currencies.
The IMF began financial operations
on March 1, 1947.2
5. THE IMF TODAY
THE GLOBAL FINANCIAL CRISIS
AND THE IMF
The Quota System When a country
joins the IMF, it contributes a
certain sum of money, called a
quota, broadly based on its relative
size in the global economy. The IMF
can draw on this pool of money to
lend to countries, and it uses the
quota as the basis of how much a
country can borrow from the Fund.
It is also the basis on which the IMF
allocates special drawing rights
(SDRs), discussed later.
One fallout of the global crisis that
began in 2008–09 was the concern
over global liquidity, especially in the
emerging markets. The G8 countries
injected hundreds of billions of dollars
into their financial systems and
implemented large stimulus packages
to get their economies moving.
6. EVOLUTION TO FLOATING
EXCHANGE RATES
EXCHANGE-RATE
ARRANGEMENTS
The IMF’s system was initially one
of fixed exchange rates. Because
the U.S. dollar was the cornerstone
of the international monetary
system, its value remained constant
with respect to the value of gold.
Other countries could change the
value of their currency against gold
and the dollar, but the value of the
dollar remained fixed.
The Jamaica Agreement formalized the
break from fixed exchange rates. As
part of this move, the IMF began to
permit countries to select and maintain
an exchange-rate arrangement of their
choice, provided they communicated
their decision to the IMF. The formal
decision of a country to adopt a
particular exchange-rate mechanism is
called a de jure system. In addition, the
IMF surveillance program determines
the de facto exchange-rate system that
a country uses.
7. HARD PEG
There are two possibilities for countries that adopt a hard peg.
The first is like the example of El Salvador, which, as described
in the opening case, has no separate legal tender but instead
has adopted the U.S. dollar as its currency.
SOFT PEG
There are several different types of soft pegs, but most
countries in this category have adopted a conventional fixed-
peg arrangement, whereby a country pegs its currency to
another currency or basket of currencies and allows the
exchange rate to vary plus or minus 1 percent from that value.
FLOATING ARRANGEMENT
Currencies considered to be in a floating arrangement are
either floating (35 countries) or free floating (31 countries).
Floating currencies are those that generally change according
to market forces but may be subject to market intervention.
THREE CHOICES: HARD PEG, SOFT
PEG, OR FLOATING
ARRANGEMENT
The IMF classifies currencies
into one of three broad
categories, moving from the
least to the most flexible. If
they have adopted a hard
peg (13.2 percent of the
total), they lock their value
onto something and don’t
change.
8. NONINTERVENT
ION: CURRENCY
IN A FLOATING-
RATE WORLD
Currencies that float freely respond
to supply and demand conditions
uncontrolled by gov- ernment
intervention. This concept can be
illustrated using a two-country
model involving the United States
and Japan. Figure 9.2 shows the
equilibrium exchange rate in the
market and then a movement to a
new equilibrium level as the market
changes. The demand for yen in
this example is a function of U.S.
demand for Japanese goods and
services, such as auto- mobiles, and
yen-denominated financial assets,
such as securities.
9. INTERVENTION:
CURRENCY IN A
FIXED-RATE OR
MANAGED
FLOATING-
RATE WORLD
In the preceding example,
Japanese and U.S. authorities
allowed supply and demand to
determine the values of the yen
and dollar. That doesn’t happen for
currencies that fix their exchange
rates and then don’t allow them to
move according to market forces.
There can be times when one or
both countries might not want
exchange rates to change.
10. BLACK
MARKETS
In many of the countries that do not
allow their currencies to float
according to market forces, a black
market can parallel the official
market and yet be aligned more
closely with the forces of supply and
demand. The less flexible a country’s
exchange-rate arrangement, the
more likely there will be a thriving
black (or parallel) market, which
exists when peo- ple are willing to
pay more for dollars than the official
rate. In order for such a market to
work, the government must control
access to foreign exchange so it can
control the price of its currency.
11. FOREIGN-
EXCHANGE
CONVERTIB
ILITY AND
CONTROLS
Some countries with fixed
exchange rates control access
to their currencies. Fully
convertible currencies are those
that the government allows both
residents and nonresidents to
purchase in unlimited amounts.
12. EXCHANGE
RATES AND
PURCHASIN
G POWER
PARITY
The next three sections examine
three interconnected issues: the
relationship between infla- tion
and exchange rates, the
relationship between interest
rates and exchange rates, and
the factors you can use to
forecast (or at least attempt to
forecast) future exchange rates.
13. EXCHANGE
RATES AND
INTEREST
RATES
Although inflation is the most
important medium-term
influence on exchange rates,
interest rates are also important.
Interest rate differentials,
however, have both short-term
and long- term components to
them. In the short term,
exchange rates are strongly
influenced by inter- est rates.
14. OTHER
FACTORS IN
EXCHANGE-
RATE
DETERMINATION
Confidence: Flight to Risk vs. Flight to
Safety Various other factors can
affect cur- rency values. One not to
be dismissed lightly is confidence: In
times of turmoil, people prefer to hold
currencies that are considered safe.
Information It is interesting how the
release of information can influence
currency values. Services such as
Bloomberg are so important because
they carry up-to-date financial news
that traders can follow as they try to
figure out what will happen to
exchange rates.
15. FUNDAMENTAL
AND
TECHNICAL
FORECASTING
Managers can forecast exchange
rates by using either of two
approaches: fundamental or
technical. Fundamental forecasting
uses trends in economic variables to
predict future
rates. The data can be plugged into an
econometric model or evaluated on a
more subjective basis. Technical
forecasting uses past trends in
exchange rates themselves to spot
future rate trends.
16. 1.FUNDAMENTAL
FACTORS TO
MONITOR
For freely fluctuating currencies,
the law of supply and demand
determines market value.Your
ability to forecast exchange
rates depends on your time
horizon.
17. MARKETING
DECISIONS
Marketing managers watch
exchange rates because they can
affect demand for a company’s
products at home and abroad. In
2013, as the Indian rupee plunged in
value against the U.S. dollar, Indian
small importers were in trouble
because they didn’t have the financial
strength to deal with the currency
fluctuations. In most cases, they had
to pay their suppliers in U.S. dollars,
and when the rupee fell, they had to
come up with more rupees to
convert into dollars to pay the
suppliers, and they were struggling to
do so.
18. PRODUCTION
DECISIONS
Exchange-rate changes can also
affect production decisions. A
manufacturer in a country where
wages and operating expenses
are high might be tempted to
relocate production to a country
with a currency that is rapidly
losing value. The company’s
home currency would buy lots of
the weak currency, making the
company’s initial investment
cheap.
19. FINANCIAL
DECISIONS
Exchange rates can affect
financial decisions primarily in
sourcing financial resources,
remitting funds across national
borders, and reporting financial
results. In the first area, a
company might be tempted to
borrow money in places where
interest rates are lowest.
However, recall that interest-
rate differentials often are
compensated for in money
markets through exchange-rate
changes.