The document discusses exchange rate mechanisms and types of exchange rates. It provides details about:
1) The Exchange Rate Mechanism (ERM) which is used by central banks to manage currency exchange rates relative to other currencies through fixed or floating exchange rates.
2) The notable European ERM introduced in 1979 to reduce exchange rate variability between European countries before adopting a single currency. It faced issues in 1992 when Britain withdrew.
3) Types of exchange rates including fixed rates which maintain stable rates, floating rates set by market forces, and managed floats where governments influence rate changes.
Introduction to Exchange Rate Mechanism: Spot- Forward Rate, Exchange Arithmetic. -- Deriving the Actual Exchange Rate: Forwards, Swaps, Futures and Options. Guarantees in Trade: Performance, Bid Bond etc.
Introduction to Exchange Rate Mechanism: Spot- Forward Rate, Exchange Arithmetic. -- Deriving the Actual Exchange Rate: Forwards, Swaps, Futures and Options. Guarantees in Trade: Performance, Bid Bond etc.
8 key factors that affect foreign exchange ratesannadesoza123
The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another.
Factor Affecting exchange rate and Theories of exchange rate Jatin Goyal
It explains the following topics
Factor Affecting the exchange rate
CURRENCY DEPRECIATION VS.CURRENCY APPRECIATION
Foreign exchange
Theories of exchange rate
Determination of exchange rate chapter 6Nayan Vaghela
Determination of exchange rate, mint par theory, balance of payment theory, Purchasing power parity theory, Absolute version and relative version, Criticisms
Module – I Commodity Markets and Exchanges:
Growth of Global and Domestic Commodities Derivatives Markets, Agricultural Commodities Market and Non-Agricultural Commodities Markets
Commodity Exchanges: Exchanges around the World and its Importance, Commodity Exchanges in India. National Exchanges and Regional Exchanges, platform – Structure, Exchange memebership, Capital requirements, commodities traded on National exchanges, instruments available for trading and Electronic Spot Exchanges.
8 key factors that affect foreign exchange ratesannadesoza123
The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another.
Factor Affecting exchange rate and Theories of exchange rate Jatin Goyal
It explains the following topics
Factor Affecting the exchange rate
CURRENCY DEPRECIATION VS.CURRENCY APPRECIATION
Foreign exchange
Theories of exchange rate
Determination of exchange rate chapter 6Nayan Vaghela
Determination of exchange rate, mint par theory, balance of payment theory, Purchasing power parity theory, Absolute version and relative version, Criticisms
Module – I Commodity Markets and Exchanges:
Growth of Global and Domestic Commodities Derivatives Markets, Agricultural Commodities Market and Non-Agricultural Commodities Markets
Commodity Exchanges: Exchanges around the World and its Importance, Commodity Exchanges in India. National Exchanges and Regional Exchanges, platform – Structure, Exchange memebership, Capital requirements, commodities traded on National exchanges, instruments available for trading and Electronic Spot Exchanges.
Currency Derivatives are available on four currency pairs viz. US Dollars (USD), Euro (EUR), Great Britain Pound (GBP) and Japanese Yen (JPY). Cross Currency ...
The trading of one currency for another or system of converting one national currency into another (Rupee for Dollar)
An exchange rate is the price of a currency (value of one currency relative to the other)
It is essential for the trading between nations
For Example: how many Indian rupees does it take to buy one US dollar?
If the exchange rate is 71, it means Rs. 71 are needed to buy 1 USD
Premier University[B.B.A]
International Financial Management
Presentation Subject
EXCHANGE RATE DETERMINATION
Submitted to
Lecturer:Ms.Nilufar Sultana
Department of Finance
Faculty of Business Administration
Premier University, Chittagong.
Semester: 8th Section: “A” Batch :22nd
Group Name: D
This ppt covers Foreign exchange rate Fluctuation in this the topics covered are Appreciation (or strengthening) of a currency, Spot transaction-Spot rate, forward market, forward transaction, currency option, currency swap, Exposure, Transaction exposure, forward exchange contract, Accounting treatment of forward contract
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
Similar to Exchange Rate Mechanism (ERM) & Exchange Rate and Types (20)
MIS Subsystems
Hierarchical Relations of Subsystems
Types of Subsystems
Organisational Function Subsystem
Activity Subsystem
Organisational Function Subsystems
Organisational Function
Production Subsystem
Marketing Subsystem
Personnel Subsystem
Finance Subsystem
Multiple approaches to the structure of MIS
Operational elements (physical components, process, and outputs for users),
Activity subsystems
Functional subsystems
Decision support
Control in Systems - Feedback and Input, Process & Output ControlMohammed Jasir PV
Control in Systems
Feedback
Definition
Mechanism of Feedback
Negative Feedback Control
Input, Process and Output Control
Positive Feedback
Negative Feedback
Input, Process and Output Control
Quality and value of information & Information overloadMohammed Jasir PV
Quality and Value of Information
Information Overload
Causes of Information Overload
Tips to solve the information overload problem
Techniques of Managing Overload
Management Information System
Concept - MIS
Components of MIS
MIS Activites
MIS Fonctions
Characteristics of MIS
Advantages of MIS
Disadvantages of MIS
An introduction to the financial market in India - Types of Financial Markets - Primary Market - Secondary Market - Nature of Fin. Market - Functions of the Markets - Importance of the Markets - SEBI
Multiple Approaches & Synthesis of MIS Structure
--------------------------------------------------------------------
Multiple Approaches to MIS
= Formal IS and Informal IS
= Public IS and Private IS
= Information Networks
= Modularity
= Extent of Integration
= Extent of Man-machine Integration
Synthesis of MIS Structure
= Physical Structure
= Conceptual Structure
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
3. Exchange Rate Mechanism (ERM)
• It is part of monetary policy and used by central banks
• ERM is a device used to manage a country's currency exchange rate
relative to other currencies
• It can be employed if a country utilizes either a fixed exchange rate or
one with floating exchange rate that is bounded around its peg (known as
an adjustable peg or crawling peg)
4. The Basics of the Exchange Rate Mechanism (ERM)
• An exchange rate mechanism is not a new concept
• Most new currencies started as a fixed exchange mechanism that tracked
gold or a widely traded commodity
• It is loosely based on fixed exchange rate margins, whereby exchange rates
fluctuate within certain margins
• An upper and lower bound interval allows a currency to experience some
variability without sacrificing liquidity or drawing additional economic risks
• The concept of currency exchange rate mechanisms is also referred to as a
semi-pegged currency system
5. Real World Example of the European ERM
• Most notable ERM in Europe in the late 1970s
• The European Economic Community introduced the ERM in 1979
• As a part of the European Monetary System
• To reduce exchange rate variability (1 currency)
• To avoid any problems with price discovery
• The ERM came in 1992 when Britain (withdrew from the treaty)
• British pound deviating by more than 6%
6. Real World Example of the European ERM
• The most notable exchange rate mechanism happened in Europe during the late
1970s.
• The European Economic Community introduced the ERM in 1979, as part of
the European Monetary System, to reduce exchange rate variability and achieve
stability before member countries moved to a single currency.
• It was designed to normalize exchange rates between countries before they
were integrated in order to avoid any problems with price discovery.
• The exchange rate mechanisms came to a head in 1992 when Britain, a member
of the European ERM, withdrew from the treaty.
• The British government initially entered the agreement to prevent the British
pound and other member currencies from deviating by more than 6%
7. What is an Exchange Rate?
• Exchange Rate is a rate at which one currency can be exchanged
into another currency
• In other words it is value one currency in terms of other
• Eg- US $ 1 = Rs. 75.48
10. 1. Fixed Exchange Rate
• Hard Peg / Rigid Peg
• This is where a Government maintains a given exchange rate over a
period of time
• This could be for a few months or even years
• In order to maintain the exchange rate at the stated level
government uses fiscal and monetary policies to control aggregate
demand
11. Merits of Fixed Exchange Rate
• Exchange Rate Stability
• Promotes Capital Movements
• Prevents Capital Outflow
• Prevents Speculation in Foreign Exchange Market
• Promotes economic integration of the world
• Promotes growth of internal money and capital markets
12. Demerits of fixed exchange rate
• Discourage Foreign Investment
• Monetary Dependence
• Cost-Price Relationship not Reflected
• Conflict with other objectives
• Less Flexibility
• Join at the Wrong Rate
• Current Account Imbalances
14. 2. Floating exchange rate
• A floating exchange rate is where the rate of exchange is determined
purely by the demand and supply of that currency on the foreign
exchange market
16. 3. Managed Float
• This is where the currency is broadly managed by the forces of
demand and supply
• But the government takes action to influence the rate of change in
the exchange rate
17. Spot and Forward Exchange Rate
• Spot Exchange Rate Transactions
• The Spot Market
18. Spot Exchange Rate
• A spot exchange rate is the price to exchange one currency for another
for immediate delivery
• It represent the prices buyers pay in one currency to purchase a second
currency
• The spot exchange rate is the price paid to sell one currency for another
for delivery on the earliest possible value date for most spot
transactions is two business days after the transaction date
• Spot date is : T+2 days, where ‘T’ refers to the trading day
• Usually, spot transactions in the interbank market involve large
transactions
• 43% of total Forex Transactions
19. Spot Exchange Rate
• Definition:
– The spot exchange rate is the amount one currency will trade for
another today
– In other words, it’s the price a person would have to pay in one
currency to buy another currency today
– You could also think of it as today’s rate that one currency can be
traded with another
20. What Does Spot Exchange Rate Mean?
• It’s the way foreign exchange rates are expressed as the foreign currency
per unit of the domestic currency or vice versa, enabling investors to
equate the price of a good or a service in a common currency
• Usually, spot transactions in the interbank market involve large
transactions, whose bank settlement takes place on the second following
business day
• Spot transactions account for 43% of the total foreign exchange
transactions
21. • Thus, the foreign exchange spot market is prone to fluctuations and high volatility,
especially in the short-term.
• As speculators often create noise around a currency, they affect the exchange rate.
• In cases that the foreign exchange spot market fluctuates sharply, the government
sometimes intervenes to adjust interest rates or to make transactions in the
domestic currency, so their country isn’t put in a trading disadvantage with other
countries. Sometimes this is referred to as currency manipulation.
22. • The spot rate is the price at which a currency, security, or commodity can be
acquired. Spot rates are settlement prices of spot contracts.
• A spot contract is a contract of buying or selling stocks on the spot date.
• Spot date is : T+2 days, where ‘T’ refers to the trading day.
• So, if a spot contract is executed at a price today, it would be delivered to
the investor two business days after the trade date. And the price at which
the contact got executed would be considered as the spot rate.
23. • Example
• A U.S. multinational imports textile from Bangladesh and Pakistan. The company is
required to pay 5 billion Bangladeshi Taka to the company from Bangladesh and 11
billion Pakistani Rupee to the company from Pakistan, today. Jonathan, who works
in the accounting department, uses today’s exchange rate to convert the
Bangladeshi Taka and the Pakistani Rupee in US dollars.
• 1 Bangladeshi Taka = 0.013 US Dollar, therefore 5 billion Bangladeshi Taka =
5,000,000 x 0.013 = $65,000
• 1 Pakistani Rupee = 0.0095 US Dollar, therefore 11 billion Pakistani Rupee =
11,000,000 x 0.0095 = $104,500
• Therefore, the U.S. multinational has to sell $65,000 to pay its supplier from
Bangladesh and $104,500 to pay its supplier from Pakistan.
24. Spot Market
• The spot market is where financial instruments, such as commodities,
currencies and securities, are traded for immediate delivery
• Delivery is the exchange of cash for the financial instrument
• A futures contract, on the other hand, is based on the delivery of the
underlying asset at a future date
25. Spot Exchange Rate Transactions
• For most spot foreign exchange transactions, the settlement date is two business
days after the transaction date
• The most common exception to the rule is the U.S. dollar vs. the Canadian dollar,
which settles on the next business day
• Weekends and holidays mean that two business days is often far more than two
calendar days, especially during the Christmas and Easter holiday season
26. Forward Exchange Rate /Forward rate / Forward Price
• A forward rate is a rate applicable to a financial transaction that will take place
in the future
• It is the exchange rate at which a bank agrees to exchange one currency for
another at a future date when it enters into a forward contract with an investor
• Multinational corporations, banks, and other financial institutions enter into
forward contracts to take advantage of the forward rate for hedging purposes
27. Forward Exchange Rate
• Forward rates are based on the spot rate, adjusted for the cost of carry and
refer to the rate that will be used to deliver a currency, bond or commodity at
some future time.
• It may also refer to the rate fixed for a future financial obligation, such as the
interest rate on a loan payment.