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.
An interesting, thorough, detailed and conspicuous presentation regarding "Exchange Rates": relevant terminology and explanatory diagrams are included.
An interesting, thorough, detailed and conspicuous presentation regarding "Exchange Rates": relevant terminology and explanatory diagrams are included.
This revision presentation is designed for students revising their A2 macroeconomics. It looks at the economics of currency markets and focuses in particular on different exchange rate systems and the debate over fixed versus floating currencies.
Balance of Payments and Exchange Rate PPT.pptxHimaanHarish1
Balance of Payments , Components of BOP, Current account; Causes of disequilibrium in Balance of Payments, Foreign Exchange rate,Devaluation, Appreciation , Revaluation and Depreciation,
describing the exchange rate systems, explaining how government uses direct and indirect intervention to influence exchange rates, and how government intervention in the forex markets.
The interaction between international trade.WajidMoon
International finance encompasses the study and practice of financial management in a global context, focusing on the flow of capital across borders, currency exchange rates, international investment, and international trade. Here's a concise description:
Discuss the difference between international finance and domestic finance. Explain the most traded currencies in the world and the reason of their popularity
The Gold Standard; The Balance of Payments; and The Flexible Exchange RatesJhoana Duco
This is about three topics, namely The Gold Standard, The Balance of Payments, and The Flexible Exchange Rates.
It includes:
- definition,
- history,
- how does it work,
- advantages, and
- disadvantages
This revision presentation is designed for students revising their A2 macroeconomics. It looks at the economics of currency markets and focuses in particular on different exchange rate systems and the debate over fixed versus floating currencies.
Balance of Payments and Exchange Rate PPT.pptxHimaanHarish1
Balance of Payments , Components of BOP, Current account; Causes of disequilibrium in Balance of Payments, Foreign Exchange rate,Devaluation, Appreciation , Revaluation and Depreciation,
describing the exchange rate systems, explaining how government uses direct and indirect intervention to influence exchange rates, and how government intervention in the forex markets.
The interaction between international trade.WajidMoon
International finance encompasses the study and practice of financial management in a global context, focusing on the flow of capital across borders, currency exchange rates, international investment, and international trade. Here's a concise description:
Discuss the difference between international finance and domestic finance. Explain the most traded currencies in the world and the reason of their popularity
The Gold Standard; The Balance of Payments; and The Flexible Exchange RatesJhoana Duco
This is about three topics, namely The Gold Standard, The Balance of Payments, and The Flexible Exchange Rates.
It includes:
- definition,
- history,
- how does it work,
- advantages, and
- disadvantages
Techniques to optimize the pagerank algorithm usually fall in two categories. One is to try reducing the work per iteration, and the other is to try reducing the number of iterations. These goals are often at odds with one another. Skipping computation on vertices which have already converged has the potential to save iteration time. Skipping in-identical vertices, with the same in-links, helps reduce duplicate computations and thus could help reduce iteration time. Road networks often have chains which can be short-circuited before pagerank computation to improve performance. Final ranks of chain nodes can be easily calculated. This could reduce both the iteration time, and the number of iterations. If a graph has no dangling nodes, pagerank of each strongly connected component can be computed in topological order. This could help reduce the iteration time, no. of iterations, and also enable multi-iteration concurrency in pagerank computation. The combination of all of the above methods is the STICD algorithm. [sticd] For dynamic graphs, unchanged components whose ranks are unaffected can be skipped altogether.
Levelwise PageRank with Loop-Based Dead End Handling Strategy : SHORT REPORT ...Subhajit Sahu
Abstract — Levelwise PageRank is an alternative method of PageRank computation which decomposes the input graph into a directed acyclic block-graph of strongly connected components, and processes them in topological order, one level at a time. This enables calculation for ranks in a distributed fashion without per-iteration communication, unlike the standard method where all vertices are processed in each iteration. It however comes with a precondition of the absence of dead ends in the input graph. Here, the native non-distributed performance of Levelwise PageRank was compared against Monolithic PageRank on a CPU as well as a GPU. To ensure a fair comparison, Monolithic PageRank was also performed on a graph where vertices were split by components. Results indicate that Levelwise PageRank is about as fast as Monolithic PageRank on the CPU, but quite a bit slower on the GPU. Slowdown on the GPU is likely caused by a large submission of small workloads, and expected to be non-issue when the computation is performed on massive graphs.
Data Centers - Striving Within A Narrow Range - Research Report - MCG - May 2...pchutichetpong
M Capital Group (“MCG”) expects to see demand and the changing evolution of supply, facilitated through institutional investment rotation out of offices and into work from home (“WFH”), while the ever-expanding need for data storage as global internet usage expands, with experts predicting 5.3 billion users by 2023. These market factors will be underpinned by technological changes, such as progressing cloud services and edge sites, allowing the industry to see strong expected annual growth of 13% over the next 4 years.
Whilst competitive headwinds remain, represented through the recent second bankruptcy filing of Sungard, which blames “COVID-19 and other macroeconomic trends including delayed customer spending decisions, insourcing and reductions in IT spending, energy inflation and reduction in demand for certain services”, the industry has seen key adjustments, where MCG believes that engineering cost management and technological innovation will be paramount to success.
MCG reports that the more favorable market conditions expected over the next few years, helped by the winding down of pandemic restrictions and a hybrid working environment will be driving market momentum forward. The continuous injection of capital by alternative investment firms, as well as the growing infrastructural investment from cloud service providers and social media companies, whose revenues are expected to grow over 3.6x larger by value in 2026, will likely help propel center provision and innovation. These factors paint a promising picture for the industry players that offset rising input costs and adapt to new technologies.
According to M Capital Group: “Specifically, the long-term cost-saving opportunities available from the rise of remote managing will likely aid value growth for the industry. Through margin optimization and further availability of capital for reinvestment, strong players will maintain their competitive foothold, while weaker players exit the market to balance supply and demand.”
Explore our comprehensive data analysis project presentation on predicting product ad campaign performance. Learn how data-driven insights can optimize your marketing strategies and enhance campaign effectiveness. Perfect for professionals and students looking to understand the power of data analysis in advertising. for more details visit: https://bostoninstituteofanalytics.org/data-science-and-artificial-intelligence/
2. Learning Outcome
• Ability to understand and develop skills on
Exchange Rates and different Exchange Rate
Regimes, types of exchange rates and how
exchange rate functions in International Trade
works
3. • Which is the major currency in the world
trade?
A. US $ B. INR C. Riyad
• Does foreign trade influence value of any
currency ?
A. Yes B. No
4. • Foreign currency
• The currency of any foreign country which is
authorized medium of circulation and the
basis for record keeping in that country.
Foreign currency is traded by banks either by
the actual handling of currency or checks, or
by establishing balances in foreign currency
with banks in those countries.
5. • What Is Foreign Exchange (Forex)?
• Foreign Exchange ( Forex or FX) is the trading of one currency
for another. For example, one can swap the U.S. dollar for the
euro. Foreign exchange transactions can take place on the
foreign exchange market, also known as the Forex Market.
• The Forex market is the largest, most liquid market in the
world, with trillions of dollars changing hands every day.1
There is no centralized location, rather the Forex market is an
electronic network of banks, brokers, institutions, and
individual traders (mostly trading through brokers or banks).
6. Exchange Rate Systems
2) floating rate
a) determined by market forces
b) float independently or with a group
of other currencies
1) fixed rate
a) also known as pegged exchange rate
b) anchored to the value of one other
currency or a group of currencies
7. IMF Principles
2) Members should intervene to counteract
disruptive short term exchange rate
movements
1) Member nations must avoid manipulating
exchange rates in order to impact balance of
payments
3) Members should take into account the
impact of intervention policies on other
members
8. Impossible Trinity
1) free capital flows
2) a fixed exchange rate
3) independent monetary authority
It is not possible for a country to maintain all
three of the following:
10. Impossible Trinity (examples)
2) Hong Kong has a fixed exchange rate &
allows free flow of capital but does not have
independent monetary authority
1) U.S. allows free flow of capital &
maintains monetary authority but does not
have a fixed exchange rate
3) In the past, China had a fixed and
maintained monetary authority but did not
allow the free flow of capital
11. Fixed Exchange Rates
Fixed exchange rates are the norm for
developing economies. By tying their
currencies to a key currency – that of a
larger, more developed nation they promote
1) a means of international settlement
2) stabile prices for imports/exports
3) limits on inflationary pressure
12. Fixed Exchange Rates (continued)
Under a fixed exchange rate system
governments maintain
o par value for their currencies
o an official exchange rate determined by
comparing par values
o an exchange rate stabilization fund to buy
and sell foreign currencies in order to
preserve the official exchange rate
13. Preventing Depreciation
If the demand for
the euro
increased, the
value of the euro
would rise and
the value of the
dollar would fall.
In order to
maintain the fixed
exchange rate,
the U.S. would
use its reserve of
euros to buy
dollars.
$1.70
Q
$1.50
Market for Euros
D1
S1
P
D2
S2
14. Preventing Appreciation
If the supply of
the euro
increased, the
value of the euro
would fall and the
value of the
dollar would rise.
In order to
maintain the fixed
exchange rate,
the U.S. would
use dollars to buy
euros.
$1.25
Q
$1.50
Market for Euros
D1
S1
P
D2
S2
16. Devaluation & Revaluation
Devaluation
o legal reduction of a currency’s par value
o market impact termed depreciation
o counters a balance of payment deficit by making
exports less expensive
Revaluation
o legal increase of a currency’s par value
o market impact termed appreciation
o counters a balance of payment surplus by
making imports less expensive
17. Bretton Woods System ( 1944)
1) response to crises of Great Depression when
floating exchange rates had been unsuccessful
2) Bretton Woods created a semi-fixed system
known as adjustable pegged exchange rates
3) currencies values tied to each other
4) nations to use fiscal and monetary policies first
to address balance of payments disequilibria
5) last resort was to re-peg currencies; greater than
10% change required IMF permission
18. Floating Exchange Rates
o also known as flexible exchange rates
o equilibrium exchange rate determined by
demand for and supply of home currency
o changes in exchange rate correct
payments imbalance by changing the
effective cost of imports and exports
o will not fluctuate erratically unless there is
significant instability in financial markets
19. • End of Bretton Woods system
In August 1971, U.S. President Richard Nixon
announced the "temporary" suspension of the
dollar's convertibility into gold. While the
dollar had struggled throughout most of the
1960s within the parity established at Bretton
Woods, this crisis marked the breakdown of
the system.
20. Depreciation & Exports
If real income in
the U.S.
increased, then
demand for
imports and
demand for the
euro would
increase. The
value of the euro
would rise and
the value of the
dollar would fall.
$1.70
Q
$1.50
Market for Euros
D1
S1
P
D2
21. Depreciation & Exports (cont.)
Since more dollars are required to purchase a euro,
the dollar has depreciated.
1) As a result, U.S. goods will become less
expensive to European citizens leading to more
exports from the U.S.
2) European goods will become more expensive to
U.S. citizens leading to fewer imports to the U.S.
$150 U.S. auto part
before $150 = 100 €
after $150 = 88.2 €
(150÷170)
100€ French wine
before 100 € = $150
after 100 € = $170
22. Appreciation & Imports
If real income in
the U.S. declined,
then demand for
imports and
demand for the
euro would also
decrease. The
value of the euro
would fall and the
value of the
dollar would rise.
$1.25
Q
$1.50
Market for Euros
D2
P
D1
S1
23. Appreciation & Imports (cont.)
Since fewer dollars are required to purchase a
euro, the dollar has appreciated.
1) As a result, U.S. goods will become more
expensive to European citizens leading to fewer
exports from the U.S.
2) European goods will become less expensive to
U.S. citizens leading to more imports to the U.S.
$150 U.S. auto part
before $150 = 100 €
after $150 = 120 €
(150/125)
100€ French wine
before 100 € = $150
after 100 € = $125
24. Arguments on Floating Exchange
Advantages Disadvantages
Fixed • simplicity and clarity of • loss of independent
exchange-rate target monetary policy
• automatic rule for • vulnerable to
monetary policy speculative attacks
• controls inflation
Floating • continuous adjustment • conducive to
in balance of payments inflation
• simplified institutional • disorderly markets
arrangements can disrupt trade and
investment patterns
• independent monetary • reckless financial
and fiscal policies policies by government
25. Managed Floating System
o intervention to stabilize rates in short run with
market forces determining rates in long run
o informal guidelines established by IMF
o clean float – free-market forces of supply and
demand determine equilibrium
o dirty float – central banks intervene to promote
depreciation of their currencies
o leaning against the wind – intervention to reduce
fluctuations in the short run only
26. Managed Float Example
permanent change in demand
to D1 – exchange rate allowed
to increase
temporary increase in demand -
central bank sells francs while
demand is D1 until return to D0
27. Monetary Policy
if demand for pounds decreases
Fed increase MS lowering rates
decreasing demand for dollars
if demand for pounds increases
Fed decrease MS raising rates
increasing demand for dollars
28. Crawling Peg
o uses small, frequent changes in par value
to correct balance of payments disequilibria
o primarily nations with high inflation
o differs from adjustable pegged rates under
which par values change infrequently
o crawling peg is appropriate for developing
nations but not for industrialized nations
whose currencies provide international
liquidity
29. Currency Crises
o also known as speculative attacks
o weak currency depreciates significantly as
a result of selling
o can substantially reduce economic growth
o usually ended by official devaluation or
adoption of a floating rate
o extreme cases => currency crashes
30. Causes of Currency Crises
1) speculation
2) deficit financed by inflation
3) weak financial systems
4) recent deregulation of financial markets
5) weak economic performance
6) political factors
7) external factors such as interest rates
8) choice of exchange rate system
31. Capital Controls
1) also known as exchange controls
2) barriers to foreign savers investing in
domestic assets
3) pro: government can control its balance of
payments position and possibly prevent
speculative attacks
4) con: weakened confidence in the
government may actually cause an
increase in capital outflows
32. Question of Foreign Exchange Tax
1) volatile capital movements lead to severe
repercussions across economies
2) a tax on inflows or outflows would reduce
the number of transaction based on short
term speculation
3) such a tax would still allow market forces
to influence investment and exchange
rates over the long term
4) how much volatility is acceptable
33. Currency Board
1) monetary authority that issues notes
convertible into a foreign anchor currency
at a fixed rate
2) anchor currency chosen for stability and
acceptability
3) government finance only by taxation and
borrowing – not by printing money
4) implies elimination of discretionary
monetary policy by domestic government
34. Case Study – Hong Kong
1) Hong Kong adopted a currency board
system in 1983
2) U.S.$ = 7.75 to 7.85 HK$
3) reversed lack of confidence in the
economy despite anticipation of control
shifting from the U.K. to China
4) contributed to significant economic growth
in Hong Kong; per capita real GDP of
$37,300 ranks 13th of 216 nations
35. Case Study – Argentina
1) adopted currency board in 1991 to limit
inflation
2) 1 U.S.$ = 1 Argentine Peso
3) issues: dollar appreciated, U.S. interest
rates rose, domestic commodity prices
fell, and Brazil’s currency depreciated
4) U.S. fiscal & monetary policy ill suited to
conditions in Argentina
5) results: deficits, borrowing, default and
economic chaos
36. Dollarization
1) partial dollarization indicates use of the
U.S. dollar alongside domestic currency
2) full dollarization indicates use of the dollar
and elimination of domestic currency
3) benefits:
a) lower inflation
b) decreased transactions costs
c) greater openness
37. Effects of Dollarization
o U.S. monetary policy would not
necessarily be appropriate for a foreign
economy
o Federal Reserve is not the lender of last
resort for that economy
o loss of seigniorage which is the income
that would have been derived from
interest bearing foreign reserves