Foreign Exchange Reserves Pros and Cons
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Pros and Cons of Increased forex reserves and position of countries according to the forex reserve they are having, including India as per the latest records.
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Foreign Exchange (FX) reserves
Presentation about Foreign exchange reserves maintained by central banks and monetary authorities of all countries worldwide. It shows the sources and spendings of forex reserves and the advantage of excess reserves.
Foreign Exchange Reserves
Central banks hold foreign exchange reserves in different currencies to maintain the external value of their domestic currency and reduce the impact of economic problems. Foreign exchange reserves became popular after the decline of the gold standard as countries used them through central banks to stabilize exchange rates. Central banks can impact foreign exchange reserves through currency issuance, import/export restrictions, currency value fluctuations, and transferring reserves without affecting domestic currency value. The top foreign exchange reserve holdings are in US dollars, pounds, yen, francs, Canadian dollars, Australian dollars, and euros. Foreign exchange reserves boost confidence, help overcome economic crises, aid currency market control and stabilization, and indicate debt repayment ability and credit ratings. As of now, Pakistan holds $8.4
Ifm scope
This document provides an introduction to international financial management. It explains that international financial management is crucial for multinational corporations to understand how international events may affect their business and how to take advantage of opportunities in foreign markets. It also discusses how changes in foreign exchange rates, interest rates, stock markets, and other financial factors in one country can impact others in today's globalized and interdependent financial world. Finally, it outlines three key aspects of international financial management that managers of multinational corporations must understand: the international financial system, foreign exchange markets, and factors of the host country's business environment.
Fx Reserves
The document discusses India's foreign exchange reserves, including how they are defined, managed by the Reserve Bank of India, and their importance. It outlines objectives of maintaining confidence, limiting external vulnerability, and providing stability. It traces the evolution of reserve management policy in India from the 1991 balance of payments crisis to current policies, which aim to ensure safety, liquidity, and protection from external shocks through deployment in US government papers. New strategies proposed include creating sovereign wealth funds or using reserves for infrastructure and technology investments.
International monetary system
The document provides an overview of the international monetary system, including:
1) The evolution of international monetary systems from bimetallism to the classical gold standard to the Bretton Woods system to the current flexible exchange rate regime.
2) Current exchange rate arrangements including free float, managed float, and currencies pegged to other currencies.
3) Details on the euro and European monetary union.
4) Examples of currency crises like the Mexican peso crisis, Asian currency crisis, and Argentine peso crisis.
5) Differences between fixed and flexible exchange rate regimes and how imbalances are addressed under each system.
Floating exchange rate system in india
The document discusses India's managed floating exchange rate system where the value of the rupee is determined by market forces in the foreign exchange market but the central bank intervenes during extreme fluctuations to minimize currency value changes. It provides a history of India's exchange rate regimes from 1947 to 1993 when it transitioned to a market-determined system. Tables show the annual average exchange rate of the rupee against the US dollar from 1993 to 2013, which generally depreciated over time except for some appreciation periods. The document also discusses the effects of rupee appreciation and depreciation on imports, exports, inflation and the balance of payments.
Foreign exchange market
The foreign exchange market is the largest financial market in the world, with over $4 trillion traded daily. It allows currencies to be exchanged between countries, facilitating international trade and investment. The market involves commercial banks, central banks, brokers, and other entities buying and selling currencies constantly. The most heavily traded currencies are the US dollar, euro, Japanese yen, British pound, and Australian dollar. Participants trade in spot markets for immediate exchange or forward markets for future delivery. Factors like economic performance, interest rates, trade balances, and political events influence exchange rates between currencies.
Evolution of international monetary system
The document discusses the evolution of the international monetary system over time. It describes several historical exchange rate regimes: (1) the classical gold standard before 1914 where currencies were pegged to gold; (2) the interwar period from 1914-1944 of fluctuating exchange rates; (3) the Bretton Woods system from 1944-1973 where the US dollar was pegged to gold and other currencies were pegged to the dollar. The Bretton Woods system collapsed in the 1970s and was replaced by (4) a system of floating exchange rates. More recently, the European Union established (5) a single currency, the euro, for many member states.
Recommended
Foreign Exchange (FX) reserves
Presentation about Foreign exchange reserves maintained by central banks and monetary authorities of all countries worldwide. It shows the sources and spendings of forex reserves and the advantage of excess reserves.
Foreign Exchange Reserves
Central banks hold foreign exchange reserves in different currencies to maintain the external value of their domestic currency and reduce the impact of economic problems. Foreign exchange reserves became popular after the decline of the gold standard as countries used them through central banks to stabilize exchange rates. Central banks can impact foreign exchange reserves through currency issuance, import/export restrictions, currency value fluctuations, and transferring reserves without affecting domestic currency value. The top foreign exchange reserve holdings are in US dollars, pounds, yen, francs, Canadian dollars, Australian dollars, and euros. Foreign exchange reserves boost confidence, help overcome economic crises, aid currency market control and stabilization, and indicate debt repayment ability and credit ratings. As of now, Pakistan holds $8.4
Ifm scope
This document provides an introduction to international financial management. It explains that international financial management is crucial for multinational corporations to understand how international events may affect their business and how to take advantage of opportunities in foreign markets. It also discusses how changes in foreign exchange rates, interest rates, stock markets, and other financial factors in one country can impact others in today's globalized and interdependent financial world. Finally, it outlines three key aspects of international financial management that managers of multinational corporations must understand: the international financial system, foreign exchange markets, and factors of the host country's business environment.
Fx Reserves
The document discusses India's foreign exchange reserves, including how they are defined, managed by the Reserve Bank of India, and their importance. It outlines objectives of maintaining confidence, limiting external vulnerability, and providing stability. It traces the evolution of reserve management policy in India from the 1991 balance of payments crisis to current policies, which aim to ensure safety, liquidity, and protection from external shocks through deployment in US government papers. New strategies proposed include creating sovereign wealth funds or using reserves for infrastructure and technology investments.
International monetary system
The document provides an overview of the international monetary system, including:
1) The evolution of international monetary systems from bimetallism to the classical gold standard to the Bretton Woods system to the current flexible exchange rate regime.
2) Current exchange rate arrangements including free float, managed float, and currencies pegged to other currencies.
3) Details on the euro and European monetary union.
4) Examples of currency crises like the Mexican peso crisis, Asian currency crisis, and Argentine peso crisis.
5) Differences between fixed and flexible exchange rate regimes and how imbalances are addressed under each system.
Floating exchange rate system in india
The document discusses India's managed floating exchange rate system where the value of the rupee is determined by market forces in the foreign exchange market but the central bank intervenes during extreme fluctuations to minimize currency value changes. It provides a history of India's exchange rate regimes from 1947 to 1993 when it transitioned to a market-determined system. Tables show the annual average exchange rate of the rupee against the US dollar from 1993 to 2013, which generally depreciated over time except for some appreciation periods. The document also discusses the effects of rupee appreciation and depreciation on imports, exports, inflation and the balance of payments.
Foreign exchange market
The foreign exchange market is the largest financial market in the world, with over $4 trillion traded daily. It allows currencies to be exchanged between countries, facilitating international trade and investment. The market involves commercial banks, central banks, brokers, and other entities buying and selling currencies constantly. The most heavily traded currencies are the US dollar, euro, Japanese yen, British pound, and Australian dollar. Participants trade in spot markets for immediate exchange or forward markets for future delivery. Factors like economic performance, interest rates, trade balances, and political events influence exchange rates between currencies.
Evolution of international monetary system
The document discusses the evolution of the international monetary system over time. It describes several historical exchange rate regimes: (1) the classical gold standard before 1914 where currencies were pegged to gold; (2) the interwar period from 1914-1944 of fluctuating exchange rates; (3) the Bretton Woods system from 1944-1973 where the US dollar was pegged to gold and other currencies were pegged to the dollar. The Bretton Woods system collapsed in the 1970s and was replaced by (4) a system of floating exchange rates. More recently, the European Union established (5) a single currency, the euro, for many member states.
Exchange rate policy in india ppt
India has transitioned through different exchange rate systems over time. Originally under a fixed exchange rate system tied to the British pound sterling from 1947-1971, India then adopted a pegged exchange rate system from 1971-1992 where the rupee was linked first to the pound sterling and later a basket of currencies. India faced a balance of payments crisis in 1991 which led it to adopt a market-determined floating exchange rate system starting in 1992 called the Liberalized Exchange Rate Management System. Under this hybrid system the rupee became partially convertible and exchange rates were determined by market forces. India has since moved towards full capital account convertibility.
international monetary system
international monetary system are sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally there allocation of capital between nation states.
International monetary system and foreign exchange
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
International Monetary System
The international monetary system has evolved over time from bimetallism and the classic gold standard to the current floating exchange rate system. The Bretton Woods system established fixed exchange rates pegged to the US dollar, which was convertible to gold. It collapsed in the 1970s when the US suspended dollar convertibility. Currently, the flexible exchange rate regime categorizes systems as floating, pegging, or target zones. Floating rates are determined by market forces while pegging and target zones involve varying degrees of intervention to stabilize rates. The international monetary system facilitates global trade and investment by providing exchange rate stability and liquidity.
Exchange Rate Mechanism (ERM) & Exchange Rate and Types
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.
Foreign Exchange reserves
Foreign exchange reserves are foreign currency deposits held by central banks. They allow countries to maintain exchange rates and stabilize currencies. Historically, the Bretton Woods system tied currencies to gold and foreign exchange reserves, but this collapsed. Now, central banks use reserves to influence currency values and support domestic monetary policies. The top reserve currencies are the US dollar, euro, yen, and pound sterling. Foreign exchange reserves boost investor confidence and help countries manage debt and economic crises. China has the largest reserves at over $3 trillion. Pakistan currently holds $8.4 billion in reserves.
Pegged Exchange Rates
Pegged exchange rates are exchange rates that are set by a country pegging its currency to another country's currency or asset like gold. Central banks maintain pegged rates by buying or selling their currency on the open market to influence supply and demand dynamics and keep the currency value near the pegged rate. Pegged rates provide stability but require large foreign currency reserves and can restrict government policies.
International monetary system
The international monetary system refers to the global network of governments and financial institutions that govern international payments, capital flows, and currency exchange rates. It aims to facilitate international trade and investment. Historically it has taken different forms, including the gold standard (1875-1914), the Bretton Woods system (1945-1972), and currently a flexible exchange rate regime. The International Monetary Fund was established in 1945 to oversee the system and provide emergency loans to countries facing balance of payments crises. It works to promote global monetary cooperation and sustainable economic growth.
History of international financial markets
The document summarizes the history of international financial markets in three periods:
1) The Classical Gold Standard period before 1914 when currencies were pegged to gold at fixed rates and exchange rates were stable.
2) The Bretton Woods system from 1944-1973 established a US dollar-based system with the IMF and World Bank overseeing fixed exchange rates.
3) From 1973 onward most currencies floated freely against each other without fixed exchange rates.
02[1].international monetary system
This chapter introduces students to the international monetary system and how it has evolved over time. It discusses key historical exchange rate regimes like bimetallism, the classical gold standard, and Bretton Woods system. It also examines recent currency crises in Mexico, Asia, and Argentina. Fixed regimes aim for stability but lack flexibility, while flexible rates create uncertainty for trade.
ARGUMENTS FOR FIXED AND FLUCTUATING EXCHANGE RATES
This document discusses the merits and demerits of fixed and flexible exchange rates. Fixed exchange rates involve exchange transactions occurring at a rate set by the central bank. This provides predictability but requires large foreign currency reserves and exchange controls. Flexible rates are set by supply and demand, automatically addressing balance of payments issues but causing uncertainty through speculation and fluctuations. In conclusion, governments often use fixed rates which require balance of payments adjustments through policy measures.
International Arbitrage and Interest Rate Parity (IRP)
we are trying to explain the conditions that will result in various forms of international arbitrage and concept of interest rate parity
International monetary system ppt @ bec doms mba bagalkot
This document provides an overview of the evolution of international monetary systems throughout history, including bimetallism, the classical gold standard, the Bretton Woods system, and the current flexible exchange rate regime. It discusses key concepts like fixed versus floating exchange rates and outlines several international monetary crises like the Mexican Peso Crisis and Asian Currency Crisis. The document also describes the development of the European Union's monetary integration, from the European Monetary System to the establishment of the Euro currency.
International monetary system
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Indian Foreign Exchange Market & Rupee Exchange Rate
The document discusses India's foreign exchange market and the rupee exchange rate. It provides background on exchange rates, defines currency appreciation and depreciation, and outlines the key players in India's foreign exchange market like commercial banks and central banks. It also examines the factors that influence exchange rates, like inflation differentials and interest rates. The document notes that while currency depreciation hurts importers, it can benefit exporters. Finally, it shares recent exchange rates between the rupee and dollar, pound, euro and yen over a five day period.
International monetary system
The document discusses the evolution of international monetary systems from early systems of bimetallism up to the current flexible exchange rate regime. Key points include:
- Under bimetallism before 1875, both gold and silver were used internationally as money with Gresham's Law implying the least valuable metal would circulate.
- The classical gold standard from 1875-1914 established gold as the primary global reserve asset with currencies pegged to gold and exchange rates determined by relative gold contents.
- The interwar period saw the breakdown of the gold standard and widespread currency devaluations.
- The Bretton Woods system from 1945-1972 pegged currencies to the U.S. dollar which was peg
Devaluation of indian currency and its implications
The document provides an overview of a seminar presentation on devaluation of the Indian rupee. It includes:
- An introduction defining devaluation and the history of rupee devaluation in India, including major devaluations in 1966 and 1991.
- Causes of recent rupee devaluation, including a growing current account deficit, higher imports, inflation, and outflows of foreign capital.
- Implications of rupee devaluation, such as increased export competitiveness but also higher inflation.
- Policy options for the Reserve Bank of India and Government of India to manage the exchange rate and control further rupee devaluation.
International monetory system
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
American depository receipts
American Depository Receipts (ADRs) allow foreign companies to have their stock traded on American exchanges. ADRs represent ownership of shares in a foreign company and pay dividends in US dollars. They were introduced in 1927 to make it easier for American investors to buy shares of foreign companies without dealing with foreign market complexities like different currencies and trading times. ADRs are traded on major US exchanges like the NYSE and NASDAQ.
International financial managment
International financial management deals with planning and managing financial operations of international activities of an organization. It includes managing foreign exchange risks, international taxation, financing decisions, investments in international financial markets, and accounting differences between nations. The key functions are performed by the treasurer, who manages cash and secures financing, and the controller, who handles accounting activities. The scope of international financial management encompasses balance of payments, international institutions like the IMF and World Bank, and financial markets like foreign exchange markets.
Foreign exchange
The foreign exchange market allows for the simultaneous transaction of one currency for another. The value of a currency is expressed relative to another currency through an exchange rate. Common determinants of exchange rates include international parity conditions, a country's balance of payments, economic factors, and political conditions. Major participants in the forex market include banks, central banks, commercial companies, investment firms, and retail brokers. Common financial instruments traded include spots, forwards, futures, swaps, and options. The United States dollar is the most heavily traded currency.
International Economy"yuan as the reserve currency"
A reserve currency is a currency that is held in large quantities by central banks and financial institutions to conduct international transactions, investments, and settle debt obligations. The main reserve currencies are the US dollar, euro, Japanese yen, British pound, and Chinese yuan. The dollar became the dominant reserve currency after World War 2 when the US emerged as a superpower and countries used their gold reserves to purchase dollars. China's decision to devalue the yuan in 2015 had impacts like strengthening its bid to join the IMF's SDR basket of reserve currencies and giving Chinese exports a price advantage over competitors from countries like Vietnam and Indonesia.
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Exchange rate policy in india ppt
India has transitioned through different exchange rate systems over time. Originally under a fixed exchange rate system tied to the British pound sterling from 1947-1971, India then adopted a pegged exchange rate system from 1971-1992 where the rupee was linked first to the pound sterling and later a basket of currencies. India faced a balance of payments crisis in 1991 which led it to adopt a market-determined floating exchange rate system starting in 1992 called the Liberalized Exchange Rate Management System. Under this hybrid system the rupee became partially convertible and exchange rates were determined by market forces. India has since moved towards full capital account convertibility.
international monetary system
international monetary system are sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally there allocation of capital between nation states.
International monetary system and foreign exchange
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
International Monetary System
The international monetary system has evolved over time from bimetallism and the classic gold standard to the current floating exchange rate system. The Bretton Woods system established fixed exchange rates pegged to the US dollar, which was convertible to gold. It collapsed in the 1970s when the US suspended dollar convertibility. Currently, the flexible exchange rate regime categorizes systems as floating, pegging, or target zones. Floating rates are determined by market forces while pegging and target zones involve varying degrees of intervention to stabilize rates. The international monetary system facilitates global trade and investment by providing exchange rate stability and liquidity.
Exchange Rate Mechanism (ERM) & Exchange Rate and Types
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.
Foreign Exchange reserves
Foreign exchange reserves are foreign currency deposits held by central banks. They allow countries to maintain exchange rates and stabilize currencies. Historically, the Bretton Woods system tied currencies to gold and foreign exchange reserves, but this collapsed. Now, central banks use reserves to influence currency values and support domestic monetary policies. The top reserve currencies are the US dollar, euro, yen, and pound sterling. Foreign exchange reserves boost investor confidence and help countries manage debt and economic crises. China has the largest reserves at over $3 trillion. Pakistan currently holds $8.4 billion in reserves.
Pegged Exchange Rates
Pegged exchange rates are exchange rates that are set by a country pegging its currency to another country's currency or asset like gold. Central banks maintain pegged rates by buying or selling their currency on the open market to influence supply and demand dynamics and keep the currency value near the pegged rate. Pegged rates provide stability but require large foreign currency reserves and can restrict government policies.
International monetary system
The international monetary system refers to the global network of governments and financial institutions that govern international payments, capital flows, and currency exchange rates. It aims to facilitate international trade and investment. Historically it has taken different forms, including the gold standard (1875-1914), the Bretton Woods system (1945-1972), and currently a flexible exchange rate regime. The International Monetary Fund was established in 1945 to oversee the system and provide emergency loans to countries facing balance of payments crises. It works to promote global monetary cooperation and sustainable economic growth.
History of international financial markets
The document summarizes the history of international financial markets in three periods:
1) The Classical Gold Standard period before 1914 when currencies were pegged to gold at fixed rates and exchange rates were stable.
2) The Bretton Woods system from 1944-1973 established a US dollar-based system with the IMF and World Bank overseeing fixed exchange rates.
3) From 1973 onward most currencies floated freely against each other without fixed exchange rates.
02[1].international monetary system
This chapter introduces students to the international monetary system and how it has evolved over time. It discusses key historical exchange rate regimes like bimetallism, the classical gold standard, and Bretton Woods system. It also examines recent currency crises in Mexico, Asia, and Argentina. Fixed regimes aim for stability but lack flexibility, while flexible rates create uncertainty for trade.
ARGUMENTS FOR FIXED AND FLUCTUATING EXCHANGE RATES
This document discusses the merits and demerits of fixed and flexible exchange rates. Fixed exchange rates involve exchange transactions occurring at a rate set by the central bank. This provides predictability but requires large foreign currency reserves and exchange controls. Flexible rates are set by supply and demand, automatically addressing balance of payments issues but causing uncertainty through speculation and fluctuations. In conclusion, governments often use fixed rates which require balance of payments adjustments through policy measures.
International Arbitrage and Interest Rate Parity (IRP)
we are trying to explain the conditions that will result in various forms of international arbitrage and concept of interest rate parity
International monetary system ppt @ bec doms mba bagalkot
This document provides an overview of the evolution of international monetary systems throughout history, including bimetallism, the classical gold standard, the Bretton Woods system, and the current flexible exchange rate regime. It discusses key concepts like fixed versus floating exchange rates and outlines several international monetary crises like the Mexican Peso Crisis and Asian Currency Crisis. The document also describes the development of the European Union's monetary integration, from the European Monetary System to the establishment of the Euro currency.
International monetary system
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Indian Foreign Exchange Market & Rupee Exchange Rate
The document discusses India's foreign exchange market and the rupee exchange rate. It provides background on exchange rates, defines currency appreciation and depreciation, and outlines the key players in India's foreign exchange market like commercial banks and central banks. It also examines the factors that influence exchange rates, like inflation differentials and interest rates. The document notes that while currency depreciation hurts importers, it can benefit exporters. Finally, it shares recent exchange rates between the rupee and dollar, pound, euro and yen over a five day period.
International monetary system
The document discusses the evolution of international monetary systems from early systems of bimetallism up to the current flexible exchange rate regime. Key points include:
- Under bimetallism before 1875, both gold and silver were used internationally as money with Gresham's Law implying the least valuable metal would circulate.
- The classical gold standard from 1875-1914 established gold as the primary global reserve asset with currencies pegged to gold and exchange rates determined by relative gold contents.
- The interwar period saw the breakdown of the gold standard and widespread currency devaluations.
- The Bretton Woods system from 1945-1972 pegged currencies to the U.S. dollar which was peg
Devaluation of indian currency and its implications
The document provides an overview of a seminar presentation on devaluation of the Indian rupee. It includes:
- An introduction defining devaluation and the history of rupee devaluation in India, including major devaluations in 1966 and 1991.
- Causes of recent rupee devaluation, including a growing current account deficit, higher imports, inflation, and outflows of foreign capital.
- Implications of rupee devaluation, such as increased export competitiveness but also higher inflation.
- Policy options for the Reserve Bank of India and Government of India to manage the exchange rate and control further rupee devaluation.
International monetory system
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
American depository receipts
American Depository Receipts (ADRs) allow foreign companies to have their stock traded on American exchanges. ADRs represent ownership of shares in a foreign company and pay dividends in US dollars. They were introduced in 1927 to make it easier for American investors to buy shares of foreign companies without dealing with foreign market complexities like different currencies and trading times. ADRs are traded on major US exchanges like the NYSE and NASDAQ.
International financial managment
International financial management deals with planning and managing financial operations of international activities of an organization. It includes managing foreign exchange risks, international taxation, financing decisions, investments in international financial markets, and accounting differences between nations. The key functions are performed by the treasurer, who manages cash and secures financing, and the controller, who handles accounting activities. The scope of international financial management encompasses balance of payments, international institutions like the IMF and World Bank, and financial markets like foreign exchange markets.
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International Arbitrage and Interest Rate Parity (IRP)
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International monetary system ppt @ bec doms mba bagalkot
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Similar to Foreign Exchange Reserves Pros and Cons
Foreign exchange
The foreign exchange market allows for the simultaneous transaction of one currency for another. The value of a currency is expressed relative to another currency through an exchange rate. Common determinants of exchange rates include international parity conditions, a country's balance of payments, economic factors, and political conditions. Major participants in the forex market include banks, central banks, commercial companies, investment firms, and retail brokers. Common financial instruments traded include spots, forwards, futures, swaps, and options. The United States dollar is the most heavily traded currency.
International Economy"yuan as the reserve currency"
A reserve currency is a currency that is held in large quantities by central banks and financial institutions to conduct international transactions, investments, and settle debt obligations. The main reserve currencies are the US dollar, euro, Japanese yen, British pound, and Chinese yuan. The dollar became the dominant reserve currency after World War 2 when the US emerged as a superpower and countries used their gold reserves to purchase dollars. China's decision to devalue the yuan in 2015 had impacts like strengthening its bid to join the IMF's SDR basket of reserve currencies and giving Chinese exports a price advantage over competitors from countries like Vietnam and Indonesia.
Sources of International Finance.pptx
The process of globalization has brought about numerous changes in the world economic and financial front.
Globalization has increased the capital mobility among countries which has led to development and sophistication of international financial markets.
What is International Finance?It is basically the study of monetary interactions that transpire between two or more countries. International finance focuses on areas such as FDI and currency exchange rates. Increased globalization has increased the importance of international finance.
With increasing volumes and complexities of international business, the study of international finance has become a specialized subject dealing with the study of :
Foreign Exchange Markets (Spot Transactions / Forward Market / Derivatives)
Exchange rates (Direct quote method / Indirect Quote)
MNC Financial System
Risk Management
International Accounting System
Sources of international finance
External Commercial Borrowings (ECBs)
Foreign Currency Convertible Bonds (FCCBs)
Depository Receipts (DRs)
American Depository Receipts (ADRs)
Global Depository Receipts (GDRs)
Indian Depository Receipts (IDRs)
Asian financial crisis
The Asian Financial Crisis began in Thailand in 1997 and spread to other Asian countries. Countries had fixed exchange rates, large current account deficits, and over-reliance on short-term foreign loans. When the US dollar strengthened, exports became more expensive, growth slowed, and currencies depreciated sharply. This made it difficult to repay foreign debts. The crisis deepened as foreign investors withdrew money and domestic banks refused to refinance loans. Countries turned to the IMF for assistance but austerity measures further damaged economies. The crisis highlighted issues of excessive debt, currency risk, and poor financial regulation.
Money market Instruments.pptx
The document discusses various types of depositary receipts including:
- American Depositary Receipts (ADRs) which allow US investors to invest in non-US companies and give non-US companies access to US capital markets.
- Global Depositary Receipts (GDRs) which allow companies from developing markets to raise capital from foreign markets by issuing shares that trade as depositary receipts on an exchange outside the company's home country.
- European Depositary Receipts (EDRs) which function similarly to ADRs but are listed and traded only on European stock exchanges.
Money market Instruments.pptx
The document discusses various types of depositary receipts including:
- American Depositary Receipts (ADRs) which allow US investors to invest in non-US companies and give non-US companies access to US capital markets.
- Global Depositary Receipts (GDRs) which allow companies from developing markets to raise capital from foreign markets by issuing shares that trade as depositary receipts on an exchange outside the company's home country.
- European Depositary Receipts (EDRs) which function similarly to ADRs but are listed and traded only on European stock exchanges.
Forex
1) The foreign exchange market allows for the trading of global currencies where exchange rates are determined.
2) Major currencies traded include the US Dollar, Euro, Yen, and Pound Sterling. The foreign exchange market is the largest financial market in the world, operating 24 hours a day across many locations.
3) India's foreign exchange reserves have grown significantly over the years and recently surpassed $400 billion, allowing the country to meet foreign debt obligations and maintain stability.
IMF World Bank Past Present Future
IMF promotes stability of the international financial system.
WB promotes economic development .
International monetary system: the gold standard.
Financial environment
1. The document discusses key topics related to international finance and marketing, including the historical role of the US dollar, development of the international monetary system, fixed vs floating exchange rates, foreign exchange rates, and balance of payments.
2. It provides details on factors that influence exchange rates like inflation, current accounts, and interest rates. It also explains concepts such as purchasing power parity, spot rates, and forward rates.
3. Several sections cover economic crises around the world, from the Asian financial crisis to rising inflation in emerging markets. It analyzes the causes and impacts of these crises as well as corporate and consumer responses.
Beginner’s Guide to Forex Fund Management & Its Benefits
A forex fund management firm consists of a team of experienced professionals, and typically assigns a forex fund manager to operate your account with only one objective in mind: help grow your investment, while ensuring it remains safe from any risks posed by the vagaries of the forex market. If you want investments to feature among the best forex managed accounts at the end of a financial year, then your chances improve significantly by employing the services of a firm.
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This document discusses foreign exchange systems and currency crises. It begins by defining foreign exchange and the forex market. It then examines different exchange rate systems such as fixed and floating rates as well as managed floating. It discusses concepts like devaluation, revaluation, and the impossible trinity. The document also covers currency crises, capital controls, and examples of currency boards in Hong Kong and Argentina. It concludes with an overview of dollarization and its potential effects.
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Central bank diversification strategies: rebalancing from the dollar and euro
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Central banks are actively looking to diversify their reserve portfolios and reduce allocations to US dollars and euros due to concerns over low interest rates and uncertainty in US and European fiscal outlooks. This analysis examines optimal allocations for the remaining 35% of reserves if central banks reduce their combined dollar and euro allocation to 65%. Through portfolio optimization of traditional assets (gold, British pound, Japanese yen) and alternative assets (renminbi, Canadian dollar, Australian dollar, Swiss franc, Danish krone), renminbi, gold and Australian dollar emerge as most important for diversification. However, given limited market size of Chinese and Australian markets, gold emerges
International mutual fund
Money market funds invest in short-term debt instruments like treasury bills to provide a safe place for savings with low returns. Bond funds invest in government and corporate debt and aim to provide income but carry more risk than money market funds. Balanced funds contain a mix of bonds and stocks, typically 60% equity and 40% fixed income. Equity funds focus on long-term capital growth through stock investments. International and global funds invest overseas to provide currency and geographic diversification to portfolios. Specialty funds target specific sectors, regions, or socially responsible criteria. Index funds replicate the performance of broad market indices.
The history of international monetary system
The document discusses the history and evolution of international monetary systems from 1816 to present. It describes the gold standard system from 1816-1914, the Bretton Woods system from 1945-1971, and modern exchange rate regimes. The gold standard linked currencies to gold, while the Bretton Woods system established a US dollar-backed system. Countries now choose between fixed exchange rates, where a currency is pegged to another, or floating rates, where the market determines a currency's value.
Sovereign Wealth Fund
Sovereign wealth funds are investment funds managed by governments to invest global financial assets like stocks, bonds, property, and precious metals. They serve purposes like maximizing long-term returns, reducing volatility of government revenues, and building savings for future generations. Sources of funds include current account surpluses, natural resource profits, and national assets. The largest funds are located in the Middle East and Asia, with oil and gas funds making up most assets. Debate exists around transparency and the impact of sovereign wealth funds on global financial stability.
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The Bridgeway Group is a financial services firm with offices in Pasadena and Covina, California. It offers securities and advisory services through Commonwealth Financial Network. The document includes various exhibits with disclosures related to mutual fund performance, dimensions of expected returns, benefits of diversification, and avoiding reactions to short-term market movements. It emphasizes focusing on factors within an investor's control and maintaining a long-term perspective.
Weekly news 17th Jan 2022
Exchange traded funds saw record inflows of $1 trillion in 2021, bringing total global ETF assets to nearly $9.5 trillion. US inflation rose to a nearly four-decade high of 7% in December, and the Federal Reserve's expected tightening of monetary policy could trigger capital outflows and currency depreciation for emerging economies according to the IMF. Gold ETFs saw an inflow of $40 billion in India in 2021 while silver ETFs have higher storage costs than gold ETFs but silver is used more in industry.
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The IMF and World Bank were established at Bretton Woods in 1944 to promote international monetary cooperation and economic development. The Bretton Woods system established fixed exchange rates pegged to the US dollar and gold. It aimed to maintain internal and external balance but collapsed in the 1970s due to worldwide inflation and US monetary policy. The IMF now monitors global financial stability and provides loans to countries with balance of payments issues.
Global foreign exchange 1
The foreign exchange market allows for the trading of global currencies. It is decentralized and operates 24/7 globally via banks and other financial institutions. The US dollar, euro, Japanese yen and British pound are among the most heavily traded currencies, with over $5 trillion exchanged daily worldwide as of 2013. Factors like interest rates, inflation, economic conditions, and political situations can influence exchange rates. Participants in the forex market include banks, brokers, central banks, corporations and retail investors.
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- 1. Jebin James 17382024 1 FOREIGN EXCHANGE RESERVESADVANTAGES & DISADVANTAGESTO INDIAN ECONOMY F O R E X M A N A G E M E N T
- 2. DEFINITION Foreign exchange reserves are also called Forex or FX reserves and are the amount of foreign currency deposits that a country’s central bank holds. A nation’s central bank will have these reserves in different currencies. E.g. Dollar , Euro, Pound etc. 2
- 3. CURRENT POSITION 3 94% 5% 0% 1% US $ mn. Foreign Currency Assets Gold SDRs Reserve Position in the IMF Total Reserves 401293.3 Foreign Currency Assets 376591.6 Gold 20763.2 SDRs 1471.6 Reserve Position in the IMF 2466.9
- 4. Forex Reserves Advantages Forex serves is in meeting the international finance obligations including sovereign and commercial debts, financing of imports. It helps in boosting the confidence of the market in the ability of a country to meet its external obligations. It acts as cushion for unforeseen external shocks. It was due the adequate forex reserve level that India was able to bear the global meltdown of 2008. Increases confidence of foreign investors and thus helps in boosting foreign direct investment (FDI). RBI uses the forex reserves to adjust foreign exchange rate. In case of sharp fall in the foreign exchange value of the Rupee, RBI sells the Dollar which appreciates the Rupee. The foreign currency assets are invested mainly in instruments abroad which have the highest credit rating and which do not pose any credit risk. These include sovereign bonds, treasury bills and short-term deposits in top-rated global banks besides cash accounts. 4
- 5. Forex Reserves Disadvantages Foreign exchange reserves remain high, it will increase the pressure on foreign exchange, resulting in financial regulation and control difficulties. Foreign exchange deposits directly increases the supply of base money through the money multiplier effect. The substantial increase in money supply is not only exacerbate the pressure of rising prices, but also weakening the ability of monetary regulators to control money supply and its effects. High foreign exchange reserves reduce the efficiency of the use of funds, resulting in waste of funds. High foreign exchange reserves also increases the cost of foreign exchange reserves, increasing the risk of reserves. 5
- 6. Top 10 Countries with Highest Foreign Exchange Reserves 6 1. China $3.11 Trillion 2. Japan $1.25 Trillion 3. Switzerland $800.3 Billion 4. KSA $488.9 Billion 5. Russia $460.3 Billion 6. Taiwan $458.5 Billion 7. Hong Kong $431.9 Billion 8. South Korea $402.4 Billion 9. India $401.2 Billion 10. Brazil $379.4 Billion
- 7. THANK YOU! Any Questions? 7 F O R E X M A N A G E M E N T