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Foreign exchange management
 

Foreign exchange management

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    Foreign exchange management Foreign exchange management Presentation Transcript

    • Foreign Exchange Management• Exchange-Rate Systems - Gold Standard - Par Value (Adjustable Peg) – Crawling Peg :– a fixed exchange rate in which regular (frequent?) periodic adjustments – Floating (Flexible) System: No Government Interference, Market Forces dictate equilibrium exchange rates, Value of a nation’s currency allowed to “float” down or up
    • Money• Hard (International) Currencies vs. Soft Currencies• Functions of Currency - medium of exchange - unit of account - store of value
    • Foreign Exchange Market • Credit (Financing) • Clearing • Hedging • Spot Market vs. Forward Market
    • Foreign Exchange Rate • Currency Equilibrium • Effect of Devaluation - Exports and Employment - Imports & Consumer Welfare
    • Exchange Rate Systems• Gold Standard• Par Value (Adjustable Peg)• Crawling Peg (Sliding or Gliding Parity)• Wide Band• Floating (Flexible) System
    • Official Classification of Exchange Rate Regimes• Floating Exchange Rate Regimes - independently floating regimes - managed floating regimes• Intermediate Exchange Rate Regimes - soft pegs - tightly managed floating regimes• Hard Peg Regimes - currency boards - exchange rate regimes with no separate legal tender
    • Financial Implications and Strategies• Early Warning Systems• Hedging• Leading and Lagging• Invoicing• Pass-Through Costs• Other Strategies