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Foreign Exchange           Management• Exchange-Rate Systems   - Gold Standard   - Par Value (Adjustable Peg)   – Crawling...
Money• Hard (International) Currencies  vs. Soft Currencies• Functions of Currency - medium of exchange - unit of account ...
Foreign Exchange Market  • Credit (Financing)  • Clearing  • Hedging  • Spot Market vs. Forward    Market
Foreign Exchange Rate   • Currency Equilibrium   • Effect of Devaluation   - Exports and     Employment   - Imports & Cons...
Exchange Rate Systems• Gold Standard• Par Value (Adjustable Peg)• Crawling Peg (Sliding or Gliding  Parity)• Wide Band• Fl...
Official Classification of  Exchange Rate Regimes• Floating Exchange Rate Regimes  - independently floating regimes  - man...
Financial Implications          and Strategies•   Early Warning Systems•   Hedging•   Leading and Lagging•   Invoicing•   ...
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Foreign exchange management

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Foreign exchange management

  1. 1. 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
  2. 2. Money• Hard (International) Currencies vs. Soft Currencies• Functions of Currency - medium of exchange - unit of account - store of value
  3. 3. Foreign Exchange Market • Credit (Financing) • Clearing • Hedging • Spot Market vs. Forward Market
  4. 4. Foreign Exchange Rate • Currency Equilibrium • Effect of Devaluation - Exports and Employment - Imports & Consumer Welfare
  5. 5. Exchange Rate Systems• Gold Standard• Par Value (Adjustable Peg)• Crawling Peg (Sliding or Gliding Parity)• Wide Band• Floating (Flexible) System
  6. 6. 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
  7. 7. Financial Implications and Strategies• Early Warning Systems• Hedging• Leading and Lagging• Invoicing• Pass-Through Costs• Other Strategies

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