Russian Financial Crisis (1998)

Russian Financial Crisis (1998)
Topic 3: Russian financial crisis (1998)
1.0 Introduction
Affected by the Southeast Asian financial crisis, Russia suffered from the financial crisis in May 1998 followed the crisis in October 1997. The crisis
initially reflected on currency market and security market. As a result, foreign capital about one–third of the total amount of Russian national debts
faced large–scale capital flight; exchange rate depreciated and stock market suffered a large setback; re–lending interest rate once reached up to 150%.
Stock market, bond market and currency market basically fell into halts, and banks were incapable to handle residents' withdrawals. (Desai, 2000) In
brief, the operation of the whole financial system and economy was almost ... Show more content on Helpwriting.net ...
Therefore, the Russian government planned to issue 6 billion of European bonds in 1998. On July 13 1998, the government borrowed 22.6 billion
dollars from western financial institutions led by IMF. (Lucey and Voronkova, 2008)
Thirdly, the government prolonged the redemption date of all the debts to relieve the repayment peak. The major problem for the Russian government
was lack of debt paying ability to quick liabilities. However, most of debts at that time were short–term liabilities within one year. If the government
couldn't repay them in time, it would suffer from serious debt crisis in three years. Therefore, the government must change the term structure of
repayment and repaid quick liabilities by borrowing funded debts. On August 1, the government published economic programs of stabilizing the
finance, but investors had no confidence about whether the programs could have expected effects. (Shleifer and Treisman, 2000) Besides, the investors
were not willing to buy Russian negotiable securities and even dumped the securities in their hands. Facing internal and external troubles, the
government pushed three tough emergency measures such as enlarging the region of Rouble's exchange rate fluctuations and turning the upper limit of
Rouble's exchange rate down to 9.5:1, delaying 90 days of repaying due external debts, and shifting the redemptions date of internal debts. Later, the
Central bank straightforward announced to let
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Japanese Yen The And Monetary Regimes
Japanese YEN and Monetary Regimes Wall Street Journal author Chelsey Dulaney, discusses the appreciation of the Japanese YEN (В
Ґ) and its impact
on its own economy and foreign investors. For the past quarter, the USD was the strongest amongst its competitors until it fell about 0.1% to ВҐ 108.1.
However, as frequently described within the article, there are no signs of slowing growth for the YEN and Japanese government officials are now
proposing a plan that will halt the YEN's growth. Factors that are contributing to this hike include investors placing "safe haven" assets within the
country and general worries about the overall health of the global economy. Despite plans for future intervention, Japan recently implemented
monetary policy changes during the first half of the year. Japan hoped that by lowering interest rates in the negatives, it will encourage economic
growth, making exports globally competitive. However, despite these changes, Japan 's economy is in dire need of growth stimulation and most
foreign strategists believe that Japan will not implement any changes until they are essentially "cutting it close", keeping in mind that Japan is still in a
recession. Strategist, Merill Lynch for Bank of America claims that Japan will most likely act when YEN falls down to ВҐ100, a figure that has not
been seen since 2013. After careful analysis and further research, the Japanese YEN is an incredibly recent and remarkable example of the way
international monetary regimes

The Impact of Exchange Rate Fluctuation on Macroeconomic...
THE IMPACT OF EXCHANGE RATE FLUCTUATION ON MACROECONOMIC PERFORMANCE IN NIGERIA
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
This study is designed to examine the causes of exchange rate fluctuations and their impact on the Nigerian economy since there is scarcely any
country that lives in absolute autarky in this globalised world. The economies of all the countries of the world are linked directly or indirectly through
asset or/and goods markets. This linkage is made possible through trade and facilitated by foreign exchange. The price of foreign currencies in terms of
a local currency (i.e. foreign exchange) is therefore important to the understanding of the growth trajectory of all countries of the world.
According to ... Show more content on Helpwriting.net ...
1.2STATEMENT OF THE PROBLEM
In every country of the world, exchange rate level is the paramount target of economic policy targeting. In other words, exchange rate policy should be
geared towards the attainment of long–term equilibrium rate, so as to achieve certain macro–economic objectives e.g. balance of payments equilibrium,
through proper management of the Nigerian exchange rate policy. The country started operating the floating exchange rate system in 1986 after the
introduction of SAP. It was expected that the country experience development but the reverse was the case because the country suffered consistent
hopeless development situation as her naira depreciates often against other foreign currencies, especially the dollars which was universally accepted
as the global medium of exchange. Before the floating system was introduced, $1=NO.89 but after that in 1966 we have $1=N22.05 and even today
we have $1=N150.7 .This is quite disheartening, regardless of the effort of the government of Nigeria through the activities of the regulatory body such
as the establishment of second tier foreign exchange market (SFEM) in 1986 and interbank foreign exchange market (IFEM) in 1989 and currently the
foreign exchange market (AFEM) in 1995.
The depreciation of naira over the years has caused many firms especially the import dependent firms to suffer many loses as a result of exchange rate
fluctuations. This has further led to difficulty in

Essay on ChinaвЂ™s Renminbi: вЂњOur Currency, Your Problemв
Ђќ
China's Renminbi: "Our Currency, Your Problem"
Our Currency, Your Problem is a case involving the issue of exchange rate regimes and the impact currency manipulation has on economies and trade.
The United States and Europe argued that the Renminbi (RMB) was undervalued and claimed that the People's Bank of China (PBoC) deliberately
manipulated the exchange rate to lower the prices of exports, which caused the US and Europe to run huge trade deficits with China.
The US and Europe felt that the RMB was undervalued for several reasons. One reason is that China's exports had dramatically increased, growing
30% from 2004 to 2005, making China the third largest exporter in the world and accounting for ... Show more content on Helpwriting.net ...
A fixed exchange rate regime will offer an economy greater stability in international prices and therefore encourage trade. Additionally, for developing
countries a fixed rate will assist in promoting institutional discipline as the country will adopt restrictive monetary and fiscal policies that foster an
anti–inflationary environment. A significant weakness of a fixed rate is that it is subject to destabilizing speculative attacks which could lead to
financial meltdowns and devastating economic contractions. A floating exchange rate regime allows central banks to combat macroeconomic factors
such as unemployment, inflation, and interest rates without having to worry about the effect on exchange rates. However, developing countries whose
economies depend on trade will be reluctant to allow their exchange rates to fluctuate freely.
In 1994 the Chinese government made the decision to peg the RMB to the US dollar at a rate of US$1 to RMB8.7, a year later the Renminbi
appreciated 5% and was revalued to RMB8.28. This rate would remain unchanged for the next 10 years, even though the Chinese faced heavy scrutiny
and pressure to revalue their currency. The Chinese exercised many policies in maintaining their exchange rate. The PBoC controlled the amount of
foreign currency by forcing all exporters to immediately sell their foreign currency to designated banks. The RMB could only be traded on the China
Foreign Exchange Rate

Notes On Forex Trading Tips Basics Essay
Forex Trading Tips Basics admin | March 22, 2013| 0 Comments Forex Trading ToolThings to understand to become successful Forex commercialism
may be a difficult issue. Here square measure some Forex commercialism tips to avoid losses and maximize your profit. Knowing your current state as
a bargainer is vital further as analyzing your wants. you ought to 1st understand yourself before commercialism, which implies that you just ought to
savvy abundant risk you'll afford and additionally what proportion you'll invest. Your risk tolerance and capital allocation to Forex commercialism
mustn't be too high or too low. Planning your goals is of preponderating importance, ne'er deviate from your arrange. coming up with is that the most
elementary issue towards achieving success in any field. outline what you establish are success and what is going to represent failure. additionally
savvy abundant time and energy you'll devote and whether or not you aim towards money independence or just towards generating additional financial
gain. Most people miss out on selecting the correct broker and find yourself losing cash. AN unreliable broker invalidates all the gains noninheritable
through diligence, therefore opt for judiciously. Account sort and leverage magnitude relation ought to be in accordance along with your wants and
expectations. For an entire beginner, it's necessary to bear a amount of study and observe through the employment of a demo account. build your
selections within

Foreign Exchange Market and Skill
Fundamentals of Multinational Finance, 3e (Moffett)
Chapter 6
International Parity Conditions
6.1
Multiple Choice and True/False Questions
1)
If an identical product can be sold in two different markets, and no restrictions exist on the sale or transportation costs, the product 's price should be
the same in both markets. This is know as A) relative purchasing power parity. B) interest rate parity. C) the law of one price. D) equilibrium. Answer:
C
Topic:
The Law of One Price Skill:
Recognition
2)
________ states that the spot exchange rate is determined by the relative prices of similar baskets of goods. A)
Absolute purchasing power parity ... Show more content on Helpwriting.net ...
then at an exchange rate of $1.98/ВЈ, the Honda Accord should cost ________ in Great Britain. A)
ВЈ21,375
B)
ВЈ18,365
C)
ВЈ10,795
D)
ВЈ42,322
Answer:

C
Topic:
Law of One Price Skill:
Analytical
12)
The assumptions for relative PPP are more rigid than the assumptions for absolute PPP. Answer:
FALSE
Topic:
PPP
Skill:
Conceptual
13)
________ states that differential rates of inflation between two countries tend to be offset over time by an equal but opposite change in the spot
exchange rate. A)
The Fisher Effect B)
The International Fisher Effect C)
Absolute Purchasing Power Parity D)
Relative Purchasing Power Parity Answer:
D
Topic:
PPP
Skill:
Recognition
14)
One year ago the spot rate of U.S. dollars for Canadian dollars was $1/C$1. Since that time the rate of inflation in the U.S. has been 4% greater than
that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately
________. A)
$0.96/C$
B)
$1/C$1
C)
$1.04/C$1

D) relative PPP provides no guide for this type of question Answer:
C
Topic:
PPP
Skill:
Analytical
15)
Empirical tests

Venezuela 's Economic And Social Development Essay
Venezuela has the world's largest oil reserves and by 1960, it became the wealthiest country in Latin America. PetrГіleos de Venezuela (PDVSA), the
state owned company, was the key to economic and social development in Venezuela under president Hugo Chavez. His government was settled in an
environment where the oil prices were rising and the economy was booming, so he was able fund social programs and practices that were popular to
the poor masses. This wealthy and growing Venezuelamade Chavez to be very popular and his regime very powerful. Oil revenue accounted for
nearly 90% of exports, more than 50% of government revenue, and 35% of country's GDP. However, it does not take an expert to draw the
conclusion that Venezuela revenue is extremely volatile and economy situation directly dependent on the price of the oil barrels. The revenue
generated by oil exports is the main source of foreign exchange, which is used in turn to import many food and consumer goods, as well as
intermediate inputs for production. Venezuela is also heavily dependent on imports of goods such as raw materials, machinery, electronics, and food. In
2003, Chavez government started intervening in the currency control, introducing foreign exchange controls that varied between multiple or single
exchange rates. When currency control was introduced, a dollar bought 1.6 bolivars; while today, the same dollar can buy 172 bolivars at one of the
government 's exchange rates. The decline of oil prices and

As Financial Instruments And Securities Grew In Complexity
As financial instruments and securities grew in complexity and quantity from the 15th to 19th centuries, so did the markets on which they were traded.
Lenders and borrowers became increasingly able to access both domestic and foreign financial markets, and early stages of globalization began to arise
through the integration of different financial markets. In this essay, I will define financial market integration, give a brief background as to the context
in which it occurred, and describe different methods used to measure the magnitude of integration that took place across financial markets throughout
this period. I will conclude that when sufficient information is available, one can find the degree to which markets are integrated by the... Show more
content on Helpwriting.net ...
It was therefore much more difficult to achieve high levels of integration. From a historical standpoint, it is important to know the degree to which
financial markets were integrated because the level of market integration gives great insight to the reasons for a certain amount of growth among
economies. As markets become more integrated, more and more securities are demanded and issued which translates to more money flowing into the
market, and therefore more capital investment and economic growth.
I will now discuss methods which economic historians use to measure the degree of market integration that was taking place during a certain period.
Firstly, I will use the stock exchanges in London and in Amsterdam to exemplify the measurement of integration between two financial markets (rather
than across multiple markets). Shares of the same joint stock corporations were traded simultaneously on both exchanges starting in the summer of
1723 and continuing into the nineteenth century, both through periods of peace and large wars (Neal, The Integration and Efficiency of the London
and Amsterdam Stock Markets in the Eighteenth Century, 97).
The basis for measurement of integration between these two markets comes from the Law of One Price, which states: "Taken on an

Impact of Foreign Exchange Rate on Stock Market
Exchange Rate Volatility: Impact on Industry Portfolios in Indian Stock Market
K N Badhani*, Rajani Chhimwal** and Janki Suyal***
This study examines the interaction between changes in the exchange rate of Indian Rupee and returns on different BSE–based indices representing the
firms of different sizes and industries. In absolute sense, the returns on all the stock portfolios are found to be positively correlated with the external
value of Indian Rupee. However, the analysis with an extended market model of asset pricing shows that the indices of export–oriented industries are
negatively associated with change in exchange rate, after making the adjustment for market trend. Among them, IT, technology and knowledge–based
sectors show high ... Show more content on Helpwriting.net ...
Therefore, the academicians as well as the investment managers have started taking great interest in studying the interaction between stock and foreign
exchange markets, as the stock market serves as a composite indicator of the value of investments in an economy. This interaction can be examined at
different levels–at firm–level, at industry–level and at aggregate market level. The 'flow–oriented' model of Dornbusch and Fischer (1980) postulates
that a change in exchange rate affects a firm's operational exposure, its competitiveness in the international market and, consequently, its share prices.
At macro level, the impact of exchange rate fluctuations on stock market depends on the relative importance of international trade in the economy and
the nature of trade imbalances of the country. Ma and Kao (1990) find that the currency appreciation negatively affects the domestic stock market for
an export–dominant country and positively affects the domestic stock market for an import–dominant country. The portfolio balancing model
(Branson, 1983; Frankel, 1983; and Smith, 1992), on the other hand, suggests that the excessive foreign investment flow induced by booming capital
market increases the demand for local currency, which leads to appreciation of the currency. Since the pay–off of foreign investors depends on changes
in exchange rate as well as

Exchange Rate Policy in Bangladesh: a Review of Key...
Exchange Rate Policy in Bangladesh: A Review of Key Concepts and Issues
–––––––––––––––––––––––––––––––––––––––––––––––––––––
In an open and deregulated economic environment, exchange rates can play an important role in macroeconomic management for stability and
growth. The increasing role of exchange rates since the early 1970s has indeed been a break from the Bretton Woods tradition of the 1950s and 1960s
that assigned a limited role for exchange rates in economic affairs. However, the banking and currency crises of the 1990s that afflicted many
developing countries in different regions have provided a somber lesson that in a global economic setting, exchange rate policy, and monetary and
financial policy more broadly, cannot be ... Show more content on Helpwriting.net ...
The long–run equilibrium exchange rate, in turn, could be defined as a value of the real exchange rate that is simultaneously consistent with internal
and external balance of the economy (Edwards, 1989).2
Thus the rationale behind changing the nominal exchange rate under a fixed or pegged exchange rate system is easy to follow provided that the set
rate is found to be far away from the optimal or equilibrium rate. However, why does the central bank need to manage exchange rates which are
determined by market forces in case of independent floating? This remains a contentious issue. Essentially, the central bank is believed to determine
the appropriate level (or path) of the nominal exchange rate and then intervene in foreign exchange markets to bring the actual exchange rate close to
the appropriate level. In practical sense, the appropriate level of the exchange rate may represent the rate which, when translated into a real exchange
rate, is consistent with the long–run equilibrium real exchange rate. Many economists of neoclassical persuasion believe that the market determined
exchange rates broadly represent the long–run equilibrium exchange rates and there is no need for managing exchange rates or intervention in foreign
exchange markets.

The Exchange Rate And The Balance Of Payments
Part A. The Exchange Rate and the Balance of Payments
1.Plot the dollar exchange rate since 1995. Use an appropriate benchmark to determine if the exchange rate has depreciated or appreciated since
1995. Explain why you chose such benchmark. Has the dollar depreciated or appreciated (break it up into time periods to answer this)? In Forex
Trading these four major currency pairs are the most popular ones.
1.Euro/USD –The Euro and the US dollar
2.USD/JPY – The US dollar and the Japanese Yen
3.GBP/USD– The British Pound and the US dollar
4.USD/CHF – The US dollar and the Swiss Franc.
We are using the third currency pair i.e. GBP/USD for the conduct of the study and the appreciation / Depreciation of these currencies over the ... Show
more content on Helpwriting.net ...
GBP/USD: Appreciation/Depreciation over the years:
The Appreciation / Depreciation of US dollar against Britain Pound over the years from 1995 – 2014 yearly wise is presented here, the maximum
appreciation of Dollar against Pound is seen during the year 2001 i.e. GBP/USD rate was 1.4406, the dollar appreciated 6.24 % against Pound and the
dollar depreciated to the lowest value during the year 2007 i.e. GBP/USD rate was 2.0013 and the dollar depreciated by 23.50% against pound.
The Appreciation / Depreciation of US dollar against Britain Pound over the years from 1995 – 2014 is depicted below by the following Graphs:
The above Graphs shows the Year on Year appreciation / Depreciation of US dollar over British Pound, and if we divide the entire Year on Year data
into four different time Periods i.e. 1995 –2000, 2001–2005, 2006–2010, 2010–2014 we can easily analyze the Exchange Rate fluctuation of Dollar
against Pound over a period of 5 years of time by considering the closing Exchange rates of the respective currencies during the starting and the ending
of the 5 year time horizon.
From the year 1995–2000 the dollar has appreciated by 4.26% and the dollar has appreciated to a larger extent of about 20.76% during the period
2001–2005. From the year 2006–2010 dollar has witnessed an appreciation against Pound by 19.12%. By comparing it with the previous period the
dollar has depreciated by 2.61% and from the

Problems Faced By The Spot Foreign Exchange Markets
problems in currency market
In the spot foreign exchange markets, there are several broad areas of potential abuse, which may occur on a stand–alone basis or in combination: (c)
In cases of pricing benchmarks which are determined by actual executed trades during a defined window such as the WM/Reuters rate 60–second
window, traders executing trades during the window with the intention of moving the benchmark, including splitting such trades into strategic blocks
for maximum benchmark impact, thereby making a greater spread where subsequently executing a client order at a guaranteed or limit price;
(d) Traders colluding with traders at other dealers to execute trades during the pricing window at off–market prices where the other trader is ... Show
If a firm or approved person engages in any of the activities described in 1 above, the principle may be breached and there may, depending on the
facts, also be rule breaches in relation to client confidentiality. For breaches of rules and principles, the FCA can impose a fine and give public
censure. Fines are commensurate with the seriousness of the breach and will be determined by reference to the FCA 's usual criteria.
If manipulation in the spot markets turns out not to be the only instance of foreign exchange rate manipulation, and manipulative practices are also used
in currency swaps, then individuals may also face censure under FSMA since these are qualifying investments and therefore subject to the market abuse
regime.
http://www.bbc.com/news/business–26526905
1.Explain how the particular financial service is regulated? (3 Marks)
Federal and state governments have a myriad of agencies in place that regulate and oversee financial markets and companies. These agencies each
have a specific range of duties and responsibilities that enable them to act independently of each other while they work to accomplish similar
objectives. Although opinions vary on the efficiency, effectiveness and even the need for some of these agencies, they were each designed with a goal
in mind and will most likely be around for some time. With that in

Relationship Between Exchange Rate Volatility And Trade
DISSERTATION TOPIC: THE RELATIONSHIP BETWEEN EXCHANGE RATE VOLATILITY AND TRADE (US TRADE IN GOODS, TRADE IN
SERVICES AND TRADE IN GOODS AND SERVICES (1970
–2014) This research will consist of five sections as follows: SECTION 1 –
INTRODUCTION SECTION 2–THEORETICAL FRAMEWORK AND LITERATURE REVIEW 2.1 THEORETICAL BACKGROUND 2.2
EMPIRICAL EVIDENCE 2.3 CONCLUSION SECTION 3– METHODOLOGY 3.1 MODEL SPECIFICATION 3.2 DATA 3.3 EMPIRICAL
TECHNIQUES AND METHODOLOGICAL ISSUES SECTION 4– RESULTS 4.1 PRESENTATIONS AND INTERPRETATION OF EMPIRICAL
RESULTS 4.2 DISCUSSIONS SECTION 5– CONCLUSION 5.1 SUMMARY 5.2 CONCLUSIONS AND RECOMMENDATIONS CHAPTER
ONE INTRODUCTION As an American you wake up in the morning and make your self an orange juice with an orange which is grown in
Canada and watch a television program on BBC channel from the United Kingdom on a television made in Japan. You get dressed in clothes made
of cotton grown in Africa and sewn by a factory in china. You drive around the town with a BMW car that was made in Germany using a gasoline
imported from the Middle East. Everyday, Americans rely on many other countries to provide them with the goods and services they need for their
daily living. However, other countries around the world also depend on America and Americans to supply them with the goods and services they need
for their day–to–day living. This interdependence between countries and the movement of goods and service across national boundaries is referred to as

Evaluating The Merits And Demerits Of Fixed And Floating...
Evaluate the merits and demerits of fixed and floating exchange rate regimes. Provide examples to support your arguments. I. Intro Floating
exchange rates and fixed exchange rates each provide distinct advantages and disadvantages for a given regime. In any given state of the global
economy, one given country may be better suited for one system. But there are a number of factors that influence this, and there is therefore no
universal correct system for all international economies. I will discuss the merits and demerits of a floating exchange rate, providing the examples of
the US Government response to the 2008 financial crisis and the excessive speculation that led to the 1929 stock market crash. These examples will
illustrate a time when the US economy benefitted due to a floating exchange rate and a time when the US economy suffered due to a floating exchange
rate. I will then provide a similar analysis for the fixed exchange rate using the same example of the dangers of speculation regarding the 1929 financial
crash and the emerging market crisis of Argentina in 2001. As mentioned before, there is no universal solution to the monetary policy governing
exchange rates. A general rule, however, is that floating exchange rates provide a country with more adaptability and independence in fluctuating
international economic circumstances. But they can lead to instability, needlessly expansionary policy and excessive speculation. Fixed exchange rates,
in contrast, are

What Are The Advantages And Disadvantages Of Exchange Rate...
Definition:
Exchange rates: Price of one currency, in terms of another currency.
Example: 1.23 SGD/USD
This means that 1 USD is worth 1.23 SGD.
This can also be written as 0.813 USD/SGD.
Exchange rate regimes:
Exchange rates can have a fixed rate regime, floating regime, or managed floating regime.
Fixed Exchange rate regimes:
In this, government agrees to buy and sell unlimited amount of the currency at a fixed price. Example: Thai bhat before 1998.
This effectively fixes the price of the currency.
You cannot buy for cheaper because the seller would rather sell to government at higher price.
You cannot buy at a higher price because you can always purchase cheaper from government.
Advantages:
Certainty in pricing so promotes ... Show more content on Helpwriting.net ...
Wider the width, more free the exchange rate. Narrower the width, more fixed the exchange rate.
Effects of high exchange

Monetary Economics
THE UNIVERSITY OF DODOMA
A RESEARCH PROPOSAL
ON THE TOPIC
Factors influencing Tanzania devaluation policy in its international trade
BY
NYERERE, LAZARO – T/UDOM/2010/03542
Table of Contents 1.INTRODUCTION2 1.1.Background Information2 1.2.Statement of the Problem3 1.3.Justification of the Study3 1.4.Overall
Objective4 1.5.Specific Objectives4 1.6.Research Questions4 1.7.Significance of the Study4 2.LITERATURE REVIEW5 2.1Exchange rate analysis5
2.2The nominal effective exchange rate6 2.3The real effective exchange rate6 3.METHODOLOGY6 3.1Methods of Data Collection6 3.2Methods of
Data Analysis6 3.2.1Factors affecting balance of payments6 RESEARCH BUDGET ... Show more content on Helpwriting.net ...
These developments forced some of the exporters to sell the stocks at a loss, hence jeopardizing the ability to service their bank loans. Furthermore
farmers with unsold crop could not find buyers as companies suspended crop purchase operations (BOT, 2010).
1.4. Overall Objective
The overall objective of the study will be to analyze factors influencing Tanzania devaluation policy in its international trade.
1.5. Specific Objectives * To identify the major economic sectors connecting Tanzania and the rest of the world. * To analyze the performance of the
central bank in the foreign trade negotiations. * To access the welfare changes of the Tanzanians following the success of the policy. 1.6. Research
Questions * What are major economic sectors connecting Tanzania and the rest of the world? * What are the performances of the central bank in the
foreign trade negotiations? * How will the welfare of Tanzanians be when the devaluation policy successive?
1.7. Significance of the Study
The primary significance of the study is to all actors in the devaluation policy in Tanzania. Analysis of the whole system and identifying clearly the
challenges will benefit policy makers and implementers in indicating the area of advantage for what should be done to improve the wellbeing of
Tanzanians. The other benefit

How Can A Country Be Regarded As Developed Or Underdeveloped
Table of content
1.Abstract
2.Introduction
3.How can a country be regarded as developed or underdeveloped
4.Definitions of currency
5.exchange rate theory determination
6.Stability of a currency
7.How is stability achieved and why is it an utmost important for countries to sustain
8.How did the developed countries managed to have achieved strong and stable currency and why are the developing countries failing to achieve that.
9.Merits and demerits of a country having strong currency, and advantages and disadvantages of a country having a weaker currency
10.Empirical evidence
11.conclusion
Abstract
This paper analyzes the facts behind how developed countries are able to achieve strong currencies through the exchange rate mechanisms as well as
fiscal and monetary policies to ensure stability of the currency. It shows how the exchange rate is affected through several factors such as inflation rate,
interest rate, current account and etcetera.
On the other hand it analyzes how developing countries rather have weak and very unstable currency given the methods above.
Introduction
In most of the cases developed countries (e.g Norway, England, united kingdom, Switzerland, etcetera) tend to have a very strong currencies relative to
the under developed or developing countries (e.g Mozambique, Rwanda, Angola, and etcetera) and also have a good currency stabilization, this essay
shall explain why that is the case.
To have a good understanding of currency volatility

How Exchange Rates Cause For Your Business?
Exchange rates are very important policy that a government must decide on how to implement them. The exchange rate can effect on the economy and
the actors who participant in them, thus each actor wants a policy that will benefit themselves. If a government is not too care, with could enter a
currency crisis as witnessed in Mexico. To understand what exchange rate policy, thegovernment should enact, it should understand how the actors'
attitudes. In this paper for instance, three different actors all responded differently to the question "How many problems do exchange rates cause for
your business?" The results are, in a country that experienced appreciation tradable producers were much unhappier with the exchange rate than
non–tradable producers, exporting firms were unhappier about the exchange rate if they were located in a country with a floating exchange rate
compared to non–exporting firms, and lastly government owned firms were less likely to show unhappiness with exchange rate no matter their
industry, export–status, or country. Economic actors will want the exchange rate regime to benefit them and make them prosper, thus they will support
any policy that will favor their interest. In these cases, those policies are not appreciation for tradeable producers and not floating exchange rates for
exporting firms. To understand why each actor reacted the way it did, theories about the exchange rate can be applied. To understand the behavior of
the tradable producers

Notes On Purchasing Power Parity
Purchasing power Parity (PPP), is a theory stating that the unit of one currency should have the same purchasing power as the foreign currency.
Following the theory, where the normal exchange rate between two currencies should be the same as the ratio of aggregate price level between them.
It can be also called "inflation theory of exchange rates" as it stands for the theory of a change of price level where as the overriding determinant of
exchange rate movements. It is the same status as Quantity theory of money(QT). To make things clear, the dogma of PPP or its alternative Law of
one Price (LOOP), states that when goods in the basket expressed in a single currency meaning that they cost the same in all countries. This can be
achieved only if the rate or nominal exchange rate is equal to the differences between growth rate. The dental of LOP context is to find the most
disaggregate product and price can be readily material–provides as strong presumption that it is impossible to assemble available date into aggregate
price index which can be expected to obey the LOP.
It is introduced in 1918 by Cassel, due to World War I, while there was an international policy debate about the appropriate level for nominal exchange
rates among countries after the large scale of inflations. Rogoff (1196), expressed that some economists takes PPP seriously in the Short Run(S/R), but
the red variant of PPP, is in the long run exchange rate. Dornbusch and Krugman (1976) also,

Module 1 Case Study
Nicole Hancock
Fin501 International Finance
Module 1 Case Study 1
1) Some people are arguing that the Chinese Yuan Renminbi (CNY) could take over the US dollar.
Based on your analysis and findings, will Renminbi replace the US Dollar as the world 's most popular currencies to hold? Please explain your
reasoning. While China is a quickly growing country and becoming much more important in the global economic realm in my opinion I do not believe
that their currency the YuanRenminbi will take over the US dollar. While countries are taking note that China is growing they are now accepting and
able to hold renbinbi since August 2010 (Frankel, J. (2011). Some of these countries are Mongolia, Pakistan, Thailand, and Vietnam. Some of... Show
They seem less attractive than hedge funds, mutual funds, etc. Another issue is that with currencies such as Eurozone.. when things start to look like
they are going sour the first thing people do is sell off their emerging market investments. It's a very violent market to invest in such a risky situation.
Another issue such as emerging markets in China is that the inflation rate is regulated by the government. It's not necessarily a risky trait to have in
n emerging market but it's also harder to predict a downward spiral as well. It seems as of now investors are better off in more traditional currencies.
With the Erozone for example it seemed like a great idea but when things go bad people aren't comfortable holding on to assets that they aren't familiar
with or comfortable with.
5) Based on your analysis and findings, what would you recommend to international market currency investors? If you don't have the money to
invest, don't. If it's an investment that you are looking for a quick return and are able to lose the capital you put in then I say go for it. If you are
investing for something such as a college fund or retirement fund then an emerging market isn't for you. The emerging market game is something risky
and uncertain... it needs to remain an option for people who have the ability to ride it out or lose.
6) What do you perceive you have learnt in Module 1 Case Assignment? Please provide your evaluation of the Module 1 Case Assignment in

Economic Growth Of Latin America
INTRODUCTION:
Obscured by the enticement of Asia the Latin American market has been overlooked by major Australian companies. Recent studies show Latin
America to be much more appealing for Australian companies than predicted. When it comes to marketing dimension, the largest Latin National market
segments – Brazil, Chile, Argentina tends to be compelling for Australian trade as Chile and Brazil are major trade partner in Latin America. The Latin
America region has witnessed swift adjustment economically and politically in the recent years which accelerated it's opportunities of trade with
Australia. The acceleration in economic growth of Latin America has created demand for diversified products in the region which has further created ...
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Usually automated mining consists of two types of technology with the first dealing with the operations and software advancement and second one
helps in mining vehicles and equipment with computerized technology by applying robots. The technology is offered in three forms full automation,
remote control and teleoperation. Handheld remote control helps in mining bulldozers that operate in risky conditions like underground mining, blast
areas and are operated with the use of handheld remote. Teleoperated technology also helps in mining vehicles by a operator but at a safe distance from
the mining location with use of positioning software, cameras. Lastly whole automation, providing actual autonomous command of more than one
mining vehicle. Robotic technology is used mostly for accelerating, ignition, and brake without the need for operator.
EXCHANGE RATEREGIME AND VOLATILITY:
The selection of exchange rate regimes has decisive implications on the behaviour of the nominal exchange rate. It is the key macroeconomic parameter
that affects the behaviour of relevant nominal and real exchange rates including the balance of payments, inflation rate, employment levels and the GDP
rate. It emerges from our analysis is that the Latin American countries have benefited from adopting more flexible exchange rate regimes to manage
with global financial volatility. From the 2000s, almost all the major Latin American countries

Global Firms And Governance, International Monetary...
Problem Set 1 (*optional items)
Global firms and governance, international monetary systems, forex markets, and market parities.
Global firms and governance:
1.How would you define and measure multinational corporations?
If the firm is operating facilities in multiple countries or it is controlling real assets in multiple countries then the firm is called MNC. Multinational
corporations can be measured by foreign ratios, foreign sales, and foreign employee ratios by how many countries in which the firm has operations.
2.Define Greenfield investment versus foreign direct investment.
Greenfield investment: when a parent company begins a new venture by constructing new facilities in a country outside of where the company is ...
Stocks options are used in shareholder wealth maximizing to align the interests of managers with those of shareholders, believing that those managers
will make decisions which will enhance the wealth of all stockholders.
5.Discuss the extent to which the stakeholder governance model is applicable for U.S. firms?
6.*Japan has a lower ratio of stock market capitalization relative to GDP than the US. Provide two reasons as to why this may be so. Interest rate and
market valuations.
7.*Given the added political and economic risks that appear to exist overseas, are MNCs more or less risky than purely domestic firms in the same
industry?
MNCs are likely to be less risky than purely domestic firms because much of the risk faced overseas is diversifiable.
International monetary systems
1.(ESM14, ch2–q1) Under the gold standard all national governments promised to follow the "rules of the game." This meant defending a fixed
exchange rate. What did this promise imply about a country's money supply?

Money supply was limited to the amount of gold held by a country's central bank. Any change in its holdings of gold needed to be matched by a change
in the number of local currency units outstanding. 2.(ESM14, ch2–q5) What are the advantages and disadvantages of the fixed exchange rate regime?
Advantages:
It provides stability in international prices for trading which reduces risk.

Foreign Exchange Risk And Risk
Though (Markus 2014) observes that unlike other activities within the value chain, expenditure for activities in the downstream segment of the value
chain are known and profits are more predictable, this segment of the value chain may become prone to foreign exchange risk since the variability in
foreign exchange rates impacts more on crude sales compared to its impact on purchase contracts.
The Foreign exchange risk and exposure
Risk relates to uncertainty in outcomes and foreign currency exchange risk occurs when there is uncertainty about the future foreign currency cash
flows to an entity. Movements in Currency exchange rates are unpredictable hence constitutes risk to the entity. Studies on the exposure of companies
to foreign exchange risks dates back to (Adler and Dumas 1984) when foreign exchange exposure was defined as the impact of uncertainty in changes
in foreign exchange rates on the intrinsic value of an entity represented by the present values of future cash flows.
Evidence from studies suggest that firms involved in foreign operations are exposed to foreign exchange risks which can be further classified into the
economic exposure, the transactional exposure and the translational exposure (Moyer et al. 2011; Lumby 2001). Arnold (2008) observed that
investment decisions and the viability of foreign operations in the long term are affected by both the transaction, translation and economic risks. This
is so because entities are affected by variability of

International Trade And Domestic Monetary Policy Essay
1.INTRODUCTION
"If you want to know the value of money, go and try to borrow some." This quote by Benjamin Franklin seems to have laid a foundation for several
financial concepts and practices. International trade and domestic monetary policy of a country are closely connected to each other. A financial
incentive can increase export opportunities for trading partners whereas foreign exchange controls for balance of payments can inhibit exports.
Intervention of the Apex bank in foreign exchange markets may fuel exports and impede imports or vice–versa, subject to the direction of manipulation.
Several rules prohibit nations from deceitfully enhancing exports and reducing imports through exchange rate manipulation. Traditional hesitancy to
pursue currency manipulations exists among policymakers even today. Some policymakers commiserate with purposes of currency manipulation,
especially as protection against economic shockwaves and for providing income for upcoming generations when nonrenewable resources are exhausted.
Although the unemployment figures have perceivably plunged in recent times, the economic downturn of 2008 has left a trail of economic and social
displacement. The United States has already lost millions of jobs due to currency interventions by other countries. Will the ascension of a handful of
greedy and fraudulent Wall Street traders coupled with China 's hunger to be the world 's most powerful economy, descend the global economy into a
bottomless pit in

The Basic Idea Underlying Purchasing Power Parity
II. Purchasing Power Parity
i. Intuition
The basic idea underlying purchasing power parity is the law of one price. That is to say, once the prices of the same bundle of goods in different
countries are measured using the same currency, they should be identical. As a consequence, no arbitrage in equilibrium will force the goods prices to
be equalised internationally.
Consider a situation where there are only 2 countries, say, China with the Chinese yuan as its currency unit and Japan with the Japanese yen as its
currency unit. We can express the exchange rate as either the number of yuan per yen, or its reciprocal the number of yen per yuan. For instance,
suppose that the exchange rate, defined as the number of yen it takes to buy one ... Show more content on Helpwriting.net ...
Thus, for this example, we can see that if PPP holds, there is equalisation in goods prices internationally.
The key to the appealingness of PPP is that that if PPP is valid, then there is no goods arbitrage, which indicates that it is impossible that economic
agents can gain riskless profit by exploiting price differences. Suppose the price of the good is 100 CNY in China and 2000 JPY in Japan, and the
exchange rate is 0.01 CNY: 1 JPY. Then this good could be bought for 2000 JPY in Japan and imported into China (assuming no transportation costs)
at selling at a price which when converted into yuan at the going exchange rate would be 20 yuan (=2000Г—0.01), some 80 yuan less than the
domestic price. In this case, the existence of arbitrage opportunities will force the exchange rate to be adjusted in order to reflect the relative price
of the good in the two countries. As a result, the exchange rate should adjust to 0.05 CNY: 1 JPY for the sake of ruling out arbitrage opportunities. It
is assumed that there is no transportation costs in this example; however, even if transportation costs do exist, economic agents may still be able to
gain riskless profit. If the cost of importation is 100 yen per unit, which is equal to 1 yuan at the current exchange rate, the imported good is still 79
yuan cheaper. ii. Complications of Testing PPP
According to

Foreign Exchange And Foreign Currency
Foreign Exchange & foreign currency is the elastic link between various independent political states. The Central Bank of a country frames the
monetary policy to maintain a desirable Foreign exchange rate & regulate the flow of foreign currency in an economy.
Now let us understand the correlation & interplay between foreign currency & the various economic parameters. In a floating regime of exchange
rates, the interest rates in the country are adjusted so as to vary its real exchange rates & also as a measure to control inflation. Therefore a developing
capitalist country will have its Central Bank adopt the policy of keeping its interest rate as low as possible. This will enable the entrepreneurs & the
various economic actors to obtain capital at a cheaper rate. It will also help to maintain a low real exchange rate & hence boost domestic exports.
Growing exports will see a positive trade balance or a Current Account Surplus. With a current account surplus the country can make strategic
investments in the foreign markets or acquire factories. This will result in a negative Capital Account while indicating the presence in foreign markets.
Such a cycle when sustained can provide a drive to the economy & increase the country's GDP & improve the standard of living in it.
The sources in which a foreign currency enters a domestic economy are either by the way of Foreign Direct Investment (FDI) or by the way of
Exports. Foreign Reserves can also build up due to the Central

The Foreign Exchange Reform in China and Hedging Currency...
1. Introduction
China, one of the large emerging markets, with the implementation of its "reform and opening up policy" made in 1978. China has successfully
transformed itself from an inflexible centrally–planned economy to an open and market–oriented economy, and accomplished remarkable progress in
trade market. China has maintained high and stable growth rates for over two decades. Since China is becoming an increasingly important member in
the world's economic scene, the movements of the foreign exchange rate could be an important issue for Chinese firms. On 19 of June 2010, China's
central bank declared that it will further implement the reform of foreign exchange and enhance the flexibility of RMB exchange rate (Money for life ...
It also introduced the agency system for increasing the initiative and autonomy to the trading companies in the early 1980, and permitted them to
assume independent accountability through the contract responsibility system (CRS) since the late 1980s. However, Iwatsubo & Karikomi (2006)
states that the past reform on China's exchange rate system did not seem to have significant effects. Figure 1 Exchange Rates of the RMB – US dollar
(1979–1994)
(Source from Zhang, 1997)
To summarize the whole process of the China's foreign exchange reform, it can be divided into 3 main stages. In 1994–1996, that was the first stage of
foreign exchange reform, which is called "stable development stage". China started to prepare for its regaining of membership in WTO and GATT by
reducing substantially tariffs and import licenses. In order to enlarge Chinese markets, China started to implement socialism and market–orient policy
and reformed the foreign exchange system in 1994. It launched a new exchange rate policy which based on the market's supply and demand, and
managed floating exchange rate regime. China adjusted the exchange rate from 1 USD= less than 6 RMB to 1 USD= 8.7 RMB (see figure 1). The
competitive advantage of China's product kept increasing in the international markets because of the depreciation of RMB, which can benefit the
exportation and attract foreign investments. In general, China's economy, foreign reserve account, capital, and

An Argument For An Organization
Unit one Question one Propose an argument for organizations to become multinational. Your response should be at least 200 words in length. The main
argument for organizations to become multination is to operate their businesses in different countries so that they can diversify their market beyond
the national boundary. Multinational presence will enable the firms to operate their business activities in different countries for acquiring benefits
regarding business and technical efficiency (Collins, 2013). This will reduce the cost of the product by obtaining cheap labor, tax advantage, large and
untapped market share and technical advancement. For instance, Toyota, a car manufacturing multinational company, operates its different... Show more
content on Helpwriting.net ...
There is a remarkable increase in the form of strategic alliances, merger, and acquisitions, joint venture, takeover, etc. among national and
international commercial marketplace. The primary reason for the adoption of collaborations is so as to fill in the remaining gap for an organization
to remain competitive over the competitors in its region. The strategic alliance is such type of collaboration, which is used by companies by working
together towards achieving their goals and objectives adequately (Volkmann, 2012). For example, Microsoft and Nokia made a strategic alliance for
the purpose of developing a quality based Windows mobile phone for acquiring a significant market share in the mobile industry. Similarly, 'CISCO
Systems' partnered with China's largest e–commerce company 'Alibaba' to deliver exceptional services to their corporate clients. Question three
Analyze and compose the significant components of international and domestic finance. International financial system and the local system have
various components and which drives the market some of them which have an impact on the system are: Foreign currency, foreign deposits, and
investments and foreign assets (Moffet, 2014);. The three top components which we can see are 1)International money There are international markets
where the internationally accepted currency is a trade. Such currency is deposited with

Future Exchange Rate of South Korean Won
| South Korean Won | |
Rochester Institute of Technology Mohamed Waheed–
2/8/2013
|
Table of Contents Overview2 History of Korean Won2 Macroeconomic Conditions3
Gross Domestic Production3
Major Trading Partners4 Foreign Exchange Reserve and Current Account Surplus4
Budget deficit4
Inflation and Unemployment5
Interest Rate5
Type of Currency Regime5
Current Exchange Rate6
Purchasing Power Parity and Law of One Price6
Relative Purchasing Power Parity7
Interest Rate Parity and Fisher Effects7
Forward Exchange Rates7 Balance of Payment Approach8
Current Account Balance8
Financial Account8
Basic Balance8
Official Reserve Account8 Assets Approach9
Real Interest Rate9
Prospects ... Show more content on Helpwriting.net ...
South Korea is one of the strongest economies in the Asia. Economic growth is mainly driven by manufacturing and exports. Exports include
automobile, semiconductors, computers, steel and petrochemicals. Imports include heavy machinery, steel and oil. According to Economy Watch,
South Korea is the world 's 5th largest importer of oil, with 3 million barrels per day (4).

Major Trading Partners
Korea has very strong trade relations with major world economic powers. David, a contributor to Top Foreign Stocks reported that the biggest trading
partners of South Korea are China, followed by the European Union, United States and Japan (3). Major export markets are the European Union, United
States, China, and Japan. Foreign Exchange Reserve and Current Account Surplus
Korea is one of the few countries that has been enjoying a balance of payment surplus for a long period. The following graph based on the World
Bank data, shows current account surpluses from 2005 to 2012. According to the Bank of Korea, current account surplus for 2013 is estimated to be
around $32 billion (5). This would have a strong effect on the Korean Won. Similarly, foreign exchange reserve continued to grow, except for a
notable decline in 2008. As reported by Reuters, by the end of 2012, South Korea's total foreign exchange reserve was more than $326 billion,

Is A Peg Exchange Rate Regime Is The Loss Of Control Over...
One prominent criticism of adopting a peg exchange rate regime is the loss of control over monetary policy. The simultaneous combination of a fixed
exchange rate regime and open capital markets with an independent monetary policy constitutes the Impossible Trinity. If the exchange rate is pegged
and capital is mobile, then the domestic nominal interest rate must equal the foreign nominal interest rate. Lack of effective local monetary policy is
harmful, especially when a country is hit by domestic shocks which are not correlated with business cycles in the anchor country. A domestic monetary
policy is a plus, but the existence of an independent monetary policy does not guarantee its proper performance. Developing countries usually do ...
Three historical examples of the Bretton Woods systemin the 1970s, the successful attacks under the European Monetary System in 1992 and 1993 and
the emerging market crises of 1994–2000 prove that the fragility of a peg exchange rate is more severe under an open capital market (Obstfeld and
Rogoff, 1995). Another challenge in a fixed exchange rate regime, after choosing the right anchor, is pegging to the right rate. The risk of being
locked into a misaligned exchange rate is a disadvantage of a fixed exchange rate regime. The equilibrium exchange rate –– an exchange rate based on
the fundamentals –– is the efficient rate. Any divergence from this rate and insisting on the wrong exchange rate is damaging. This is not the case in
a floating exchange rate regime where the exchange rate is not locked. However, even in a floating exchange rate regime, there is a possibility of
being far from the equilibrium exchange rate for some time. In a fixed exchange rate regime, especially if the trade of a country is concentrated with
those major currencies, the cross–rate fluctuation (the fluctuations of the anchor currency against other major currencies) is another severe flaw. For
example, the Persian Gulf oil exporting countries follow a peg exchange rate to the US dollar and have most of their trade with Europe and Japan. In
1997, the appreciation of the US dollar

Foreign Exchange Rate Sensitivity and Stock Price
FOREIGN EXCHANGE RATE SENSITIVITY AND STOCK PRICE : ESTIMATING ECONOMIC EXPOSURE OF TURKISH COMPANIES
INTRODUCTION
Variability in exchange rate is a major source of macroeconomic uncertainity affecting firms. After the 1970 's, the rapid expansion in international trade
and adoption of floating exchange rate regimes by many countries led to increase exchange rate volatility. The firm 's exposure to exchange rate risk
increased.
In the literature three types of exposure under floating exchange rate regimes are identified; economic, translation and transaction. Translation and
transaction exposures are accounting based and defined in terms of the book values of assets and liabilities denominated in foreign currency. Economic
exposure is ... Show more content on Helpwriting.net ...
His finding did not support that hypothesis. Firms did not benefit from a depreciation of the home country. On the contrary a significant decline in their
market share of industry was found in a depreciation of the home currency.
Bodner and Gentry (1993) examined industry level exposures for three countries, Canada, Japan and USA. They revealed that some industries in all
three countries had significant exposure.
Choi and Prasad 1995 developed a model and examined the exchange rate sensitivity of 409 US multinational firms. Their findings indicated that
change in exchange rate affected firm value. They found that 60 percent of firms had significant exchange rate exposure.
Domely and Sheehy (1996) found contemporaneous relation between the foreign exchange rate and the market value of large exporters in their study.
Miller & Reuer (1998) conducted a study on the implications of differences in strategy and industry structure for firms ' economic exposures to foreign
exchange rate movements. According to their results, 13–17 % of US manufacturing firms exposed for foreign exchange rate movements. Also they
indicated that foreign direct investment reduces economic exposure to foreign exhange rate movements.
Glaum, Brunner and Himmet (2000) examined the economic exposure of German corporations to change in DM/US dolar exchange rate. They found
that German firms are significantly exposed to changes in

Greece : On Considering The Possibility Of Leaving The Euro
Greece: On considering the possibility of leaving the euro and reverting back to the drachma.
By
Mohd Zubir Bin Mohd Muhili
@00410202
Table of content
Introduction
Greece became the focal point of Europe's debt crisis after the financial collapse in 2008. With global financial markets still reeling, it was announced
in 2009 that Greece had been understating its deficit figures for some years, raising soundness about the unassailability of Greek finances. By 2010,
Greece was heading towards bankruptcy, which threatened to start out a new financial crisis.
There are fears Greece may exit the euro and reverting back to the drachma. This situation dubbed as 'Grexit' has been a massive talking point all ...
The Balance of Payments (BOP) of a country is the record of all economic transactions of the country and the rest of the world in a particular period
(more commonly over a year). These transactions are made by the government bodies of the country, private firms and individuals. There are
arguments regarding the effect of Greece's balance of payments if they decide to leave the euro.
Graph 1
Based on graph 1, Greece's balance of payment has become positive and this is a sign that the country is recovering sooner rather than later. The
current account balance includes trade balance, net services, net primary income and net secondary income. Greece recorded a negative trade deficit
in 2009, 2010, 2011 and 2012 of $–35.972334, $–29.861148, $–28.715953 and $–5.933173 billion respectively. However, in the year 2013 and 2014,
Greece's trade deficit had been on a positive side. The current account balance shows that Greece has improved significantly and recorded a balance of
$1.445824 and $2.116978 billion in 2013 and 2014 respectively.
Graph 2

During the period 2009–2013, there was an increase in total Greek exports of goods on a free–on–board (fob) basis. The countries included are
Germany, Italy, UK and Bulgaria. Based on graph 2, exports to Germany recorded an increase from 4.889% in 2009 to 11.824% in 2013. The exports
to Italy and United Kingdom recorded a fall with the former improved

Brics, India, China And South Africa
I. Introduction
The acronym of "BRICS" refers to a group of five emerging economies – Brazil, Russia, India, China and South Africa which represent nearly 30% of
the earth's surface and 40% of world's population . BRIC acronym was initially introduced by Chief Economist of Goldman Sachs in his report
'Building Better Global Economic BRICs' (2001). In 2010 South Africa was added to this group of countries because of its increasing economy.
Goldman Sachs in its long term outlook in 2009 forecasted that BRICs economy will become as big as the G7 countries by 2032 and China's economy
will become as big as the US economy by 2027.
One of the main reasons why BRICS gained important role in global economy was not only the population and geographical features, but also the
growth rate and increasing share in the international trade. The BRICS' share in world trade has increased from 3.6% in 1990 to 15% in 2010 and share
in world GDP increased from 16% in 2000 to 25% in 2010.
It is evidenced that export is the main driver of economic growth in BRICS countries as they implemented export oriented growth strategies. Brazil is
very rich in coffee, soybean, sugar, and crude oil. Major share in Russia's export is natural resources: gas, oil and natural minerals. South Africa is the
richest country in the world for reserves in chromium, platinum, platinum and alumino–silicates. Additionally South Africa generates and exports 45
per cent of Africa's total electricity. India's main exports

The Issue Of Currency Exchange Without Considering Golds
1.1 Research Background After the outbreak of the First World War, Gold standard was greatly weakened. The majority of the countries in the
world abandoned the gold standard one after another and paper currency in circulation came into force from then on. Subsequently, the problem of
severe inflation arose because many countries needed to make ends meet by increasing the amount of paper money (Su and Smith, 2005). At the
end of the First World War, a number of countries with floating exchange rates began anew the quest for the stability of exchange rates. Against
such a historical background, a famous Sweden economist called Gustav Cassel put forward one theory which was named the purchasing power
parity (PPP) in order to solve the issue of currency exchange rates between different countries (Voinea, 2013). 1.2 Research Rationale Typically,
there are two major implications of the PPP theory, one is to discuss the problem of currency exchange without considering golds, the other is to
debate the issue of exchange rates from the level of prices without regard for the value of currencies. It is generally accepted that the rationale of PPP
is the law of one price, which could be expressed that the prices of identical products or services should be similar in different countries when both
markets are equal (Rogoff, Froot and Kim, 2001). 1.3 Research Question The project attempts to study the major question, namely whether or not the
absolute purchasing power parity (APPP) and

The Theorem Of Ppp : An Indispensable Process Of The Whole...
4.1 Introduction
The research methodology is an indispensable process of the whole project that can help researchers collect useful information or data related to the
subject they focus on. To put it another way, it is the way to achieve the goals of the research for researchers. The aim of this chapter is to describe in
detail the method taken in the process of the study so that the whole research would be analysed and evaluated clearly. The specific purpose of the
entire paper is to verify whether the theorem of PPP is established, which will be achieved through modeling by selecting the nominal exchange rate
and the CPI within the selected countries (Japan and India). 4.2 Types of the Method and the Data
The whole project was primarily based on the individual secondary research. The secondary research differs from the primary research, which relies
on the existing information or data. More specifically, all the sources were sorted out from academic materials, which consisted of several aspects as
follows. Large amounts of literature stemmed from the university library, including academic journals, books and reports. While some others were
derived from electronic resources, such as e–journal articles, e–Books, the official website and so forth. Other than those above, the data collected
came from the internet–based materials, namely the database provided by websites with high authority. In terms of the method category, there were two
main types of approaches applied in

The Ratio Of The Monetary Model
It is no surprise that there have been many literatures on the determination of exchange rates given the significant impact that movement in exchange
rates have on a world's political and economic stability as well as the welfare of individual countries. It plays an important role in international
investments, company profits and a countries macroeconomic fundamental factor such as unemployment, wages and interest rates among others. This
has led to the development of many models and economic theories, one of which is the monetary model. Despite this, economists still cannot agree as
to which model best explains movement in exchange rates because the results obtained when testing different models often contradict one another.
Though the research in this paper doesn't compare different economic models, it does look at the sticky and flexible price monetary model of exchange
rate determination and its variables. The paper tests the adequacy of the monetary model – (how good a job the model does in explaining movement in
exchange rates). It also shows how GDP, interest rates, money supply andinflation influences the nominal exchange rates for the Eurozone, Japan and
the UK against the USD.
The aim of this research is to test if the sticky and flexible price monetary model is valid, which of the variables making up the model has the biggest
impact in the movement of exchange rates for the case of the Eurozone, Japan and the UK, and comparing the results obtained to provide

The Proposed Bill, Currency Exchange Rate Oversight Reform...
The proposed bill, Currency Exchange Rate Oversight Reform Act of 2013, is the thoughtful way to center the Chinese currency manipulation as the
cause of economic downturn. Even though it has been six years after the Great Recession, there are approximately 8 million people unemployed and
unable to enter the labor market. (Economic Policy Institue 2013) Since the Great Depression which ended in mid 1940s, United States has never been
through such an economic downward in both national and global level.(Global Economic Crisis 2013) Due to the congressional dysfunction, the
prospect for neither fiscal nor monetary policies to combat the sluggish economy has disappeared. Realigning exchange rate as the tool of
macroeconomic stabilization could ... Show more content on Helpwriting.net ...
(Yu 2013) Moreover, the bill is the violation of the rules of World Trade Organization. Nevertheless, it is undeniable that US must do something with
the devalued yuan. The relationship between Washington and Bejjng has been about competition. Each days China becomes more and more influential
and powerful. In this new world order, China builds and strengthening the networks to other countries and associations including the one which US is
not the member such as BRICS (Brazil, Russia, India, China, and South Africa) and ASEAN plus three. China's intervention in its foreign exchange
markets gives China rapid growth. Yuan increasing becomes more important in as the means of exchange. For instance, in 2011 Japan and China, the
second and third largest world economies, came up with plans to promote "the direct exchange of their currencies". They want to "by pass the need to
use dollar". Moreover, this becomes the trend for the economies around the world to do "currency swap" agreements. They agreements would lead to
the end of "Dollar Hegemony" and the start of "new international financial architecture". (Yu 2013) United States should wait until China takes the
action to devalue yuan by itself which will happen in the near future judging

The Scandinavian Banking Crisis Of 1990
The Scandinavian Banking Crisis of 1990 – Focus Sweden
This essay was done by William Segrave, and Muhidul Hussain only.
The majority of banking crises in last 30 years have been caused be deregulation of the banking industry followed by rapid unstable credit expansion
leading to a unsustainable asset pricing bubbles. Scandinavian Banking Crisis was not exception. When the bubble bursts, the effects can ripple
through the entire economy, and can cause massive disruption and loss in confidence.
By 1985 Sweden was experiencing higher inflation rates that many other similar countries, caused by high interest rates and volatile currency. Due to
high inflation and a real after tax interest rates were low or even negative. It is only following the banking crash that Swedish households faced
positive borrowing costs for the first time in 30 years. The Swedish economy managed to have negative interest rates for so long due to the banking
regulations, which were soon the be lifted.
Sweden had a regulated banking sector. Banks, insurance companies, and other institutions were subjected to lending ceilings, and placement
requirements (liquidity ratios) required them to invest in bonds issued by the government and by mortgage institutions. Large budget deficits and an
ambitious programme for residential investment led to a situation where banks were required to hold more than 50 per cent of their assets in such
bonds, typically with long maturities and with interest rates being

A Fixed Exchange Rate Regime
n a fixed exchange rate regime,
We use the term exchange rate to refer to nominal exchange rate not the real exchange rate. Few studies propose real exchange rate instead of nominal
exchange rate.
the government announces the value of its currency in terms of the anchor currency, and the central bank is committed to buy and sell its currency at
the fixed rate. The Persian Gulf oil exporting countries follow a peg exchange rate regime; they do not have the proper institutions and central bank
credibility to go for a floating exchange rate regime, which is the regime that the developed commodity exporters such as Australia, Canada and New
Zealand follow. The academic literature of the advantages and disadvantages of various... Show more content on Helpwriting.net ...
Obstfeld and Rogoff (1995) in "The Mirage of fixed exchange rate" attack the fixed exchange rate. They encourage policy authorities to avoid
relying for their credibility on an asset price (exchange rate) which is dynamic by the people 's expectations. In the next section, we will detail the
advantages and disadvantages of floating and fixed exchange rate regimes. The possible exchange rate regimes are on a flexibility continuum of
exchange rate regimes which Frankel (1999) describes in nine categories from the most rigid (the currency union) to the least (the clean float):
1.The Currency Union: two or more countries share the same currency. If a country abandons its own currency and circulates the anchor currency, it
is called the Dollarization. It is not only applied to usage of the US dollar, but generally to the use of any foreign currency as the national currency.
For example Ecuador, El Salvador and Panama are in a currency union with the US dollar. It is the firmest fixed exchange rate regime.
2.The Currency Board: in contrast to a currency union, the country has its own currency at a fixed rate of exchange. It maintains unlimited
convertibility between its currency and the anchor currency. In a currency board, the central bank must have enough foreign currency reserves to
response to the people 's will to exchange their local currency and to be able to back each unit of the domestic currency. Similar to a currency union, in
a currency board, the

Russian Financial Crisis (1998)

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