The document discusses the effects of fluctuations in the US dollar on the world economy. It focuses on the impacts to Asia, the Middle East, Australia, and Africa. Key points include:
1) Movements in the US dollar impact world economic growth as the US is a major export destination. An appreciating dollar boosts US imports and economic growth in other countries.
2) A sharply depreciating dollar could weaken world economic growth by reducing US import demand. The world remains dependent on the US as an economic engine.
3) Research will examine dollar fluctuations and effects on exchange rates, economies, imports/exports, commodities, financial markets in Asia, the Middle East, Australia, and Africa
The document is a financial analysis of Hindalco Industries for 2006-07 to 2007-08. It includes an acknowledgement, synopsis, and sections on the global and country environment/outlook. The synopsis indicates the analysis contains EIC analysis, Porter's Five Forces industry analysis, and financial statement analysis including various ratios and Du-Pont analysis to examine trends. The global environment section describes the large global financial crisis and economic downturn, while the country outlook section discusses how past crises have impacted India's exports and real economy.
This document summarizes a paper that investigates factors influencing the U.S. dollar's status as the world's primary reserve currency and whether that status may change. It discusses how the U.S. dollar became the dominant global reserve currency following World War II due to America's unmatched economic power. However, over decades global economic growth has increasingly come from foreign economies rather than the U.S. The paper will explore challenges to the dollar from the euro, yuan, and other currencies, and whether a multi-reserve currency system may emerge.
The document discusses the fluctuations of the US dollar and its effects on the world economy. It examines factors that influence the dollar such as trade deficits and housing bubbles. A fluctuating dollar impacts other economies, with sharp depreciation lowering growth in export-reliant countries and appreciation boosting importer demand. Countries most affected include Middle Eastern oil producers, Japan, China, and India. Policies used to respond include foreign exchange intervention, monetary policy changes, fiscal policy, and reducing trade barriers.
This document discusses the fluctuations of the US dollar and its effects on the global economy. It identifies several key factors that influence the US dollar, such as trade deficits, housing markets, interest rates, and inflation. The author then examines how fluctuations in the dollar impact the economies of other countries and cause currency values to rise or fall. Several nations are discussed as being particularly affected by changes in the dollar. Finally, the document reviews some policies the US government has implemented to address fluctuations, such as monetary and fiscal policies.
The document discusses the recent strengthening of the US dollar against other major currencies from June to September 2014. It analyzes reasons for the dollar's rise, including an improving US economy and higher interest rates compared to other central banks. A stronger dollar can impact commodity prices, trade flows, and global investment patterns. While emerging market currencies and equities tend to perform worse when the dollar rises, the document concludes that India is relatively well positioned due to improving domestic fundamentals.
Ss china the us & currencies harvard kennedy school presentationMarcus Vannini
- The document discusses currency issues between China, the US, and the RMB. It argues that China should allow gradual appreciation of the RMB for several reasons, including avoiding overheating of the Chinese economy and making exchange rate policy an effective tool for balancing internal and external economic conditions.
- It also discusses criticisms of US twin deficits and theories around sustainable current account deficits. The global monetary system is shifting from a dollar-based system to one with multiple international reserve currencies.
1. The document discusses global poverty statistics, highlighting that at least 80% of humanity lives on less than $10 per day and the poorest 40% accounts for only 5% of global income.
2. Key facts provided include that 22,000 children die daily due to poverty, 72 million primary-aged children are not in school, and over 1 billion people cannot read or write.
3. Infectious diseases greatly impact the poor, with millions of cases of malaria, HIV/AIDS, and lack of access to water, shelter, and healthcare.
This document provides a market update from Mullins Investment Management for January 2015. It includes summaries of key economic indicators, market indexes, commodity prices, and bond yields as of December 31, 2014. It also analyzes the performance of domestic and international markets in 2014 and provides an outlook on the US and global economies for 2015.
The document is a financial analysis of Hindalco Industries for 2006-07 to 2007-08. It includes an acknowledgement, synopsis, and sections on the global and country environment/outlook. The synopsis indicates the analysis contains EIC analysis, Porter's Five Forces industry analysis, and financial statement analysis including various ratios and Du-Pont analysis to examine trends. The global environment section describes the large global financial crisis and economic downturn, while the country outlook section discusses how past crises have impacted India's exports and real economy.
This document summarizes a paper that investigates factors influencing the U.S. dollar's status as the world's primary reserve currency and whether that status may change. It discusses how the U.S. dollar became the dominant global reserve currency following World War II due to America's unmatched economic power. However, over decades global economic growth has increasingly come from foreign economies rather than the U.S. The paper will explore challenges to the dollar from the euro, yuan, and other currencies, and whether a multi-reserve currency system may emerge.
The document discusses the fluctuations of the US dollar and its effects on the world economy. It examines factors that influence the dollar such as trade deficits and housing bubbles. A fluctuating dollar impacts other economies, with sharp depreciation lowering growth in export-reliant countries and appreciation boosting importer demand. Countries most affected include Middle Eastern oil producers, Japan, China, and India. Policies used to respond include foreign exchange intervention, monetary policy changes, fiscal policy, and reducing trade barriers.
This document discusses the fluctuations of the US dollar and its effects on the global economy. It identifies several key factors that influence the US dollar, such as trade deficits, housing markets, interest rates, and inflation. The author then examines how fluctuations in the dollar impact the economies of other countries and cause currency values to rise or fall. Several nations are discussed as being particularly affected by changes in the dollar. Finally, the document reviews some policies the US government has implemented to address fluctuations, such as monetary and fiscal policies.
The document discusses the recent strengthening of the US dollar against other major currencies from June to September 2014. It analyzes reasons for the dollar's rise, including an improving US economy and higher interest rates compared to other central banks. A stronger dollar can impact commodity prices, trade flows, and global investment patterns. While emerging market currencies and equities tend to perform worse when the dollar rises, the document concludes that India is relatively well positioned due to improving domestic fundamentals.
Ss china the us & currencies harvard kennedy school presentationMarcus Vannini
- The document discusses currency issues between China, the US, and the RMB. It argues that China should allow gradual appreciation of the RMB for several reasons, including avoiding overheating of the Chinese economy and making exchange rate policy an effective tool for balancing internal and external economic conditions.
- It also discusses criticisms of US twin deficits and theories around sustainable current account deficits. The global monetary system is shifting from a dollar-based system to one with multiple international reserve currencies.
1. The document discusses global poverty statistics, highlighting that at least 80% of humanity lives on less than $10 per day and the poorest 40% accounts for only 5% of global income.
2. Key facts provided include that 22,000 children die daily due to poverty, 72 million primary-aged children are not in school, and over 1 billion people cannot read or write.
3. Infectious diseases greatly impact the poor, with millions of cases of malaria, HIV/AIDS, and lack of access to water, shelter, and healthcare.
This document provides a market update from Mullins Investment Management for January 2015. It includes summaries of key economic indicators, market indexes, commodity prices, and bond yields as of December 31, 2014. It also analyzes the performance of domestic and international markets in 2014 and provides an outlook on the US and global economies for 2015.
The 1994 Mexican Peso crisis occurred when the Mexican peso devalued by 14% against the US dollar. This was caused by Mexico's lax monetary policy, overvalued exchange rate, large current account deficit of 8% GDP, high proportion of short-term government debt held by non-residents, and political issues. The peso devaluation spread to other Latin American and Asian markets as fund managers liquidated investments due to fears of losses. Mexico received a $50 billion financial bailout package from the US, IMF, and other countries to restore stability and regain investor confidence. The crisis showed the need for multinational safety nets and that excessive reliance on foreign capital to finance development can have downsides.
The document discusses the concept of currency wars, where countries compete to lower the value of their currencies to boost exports. It provides background on past currency wars and reasons they occur, such as trade disputes and volatility. Specific examples discussed include China selling US treasuries, Brazil launching an offensive to suppress gains in its currency, and the introduction of the Euro challenging the US dollar's dominance. The effects of currency devaluation like improving trade balances are also summarized.
- The document discusses the recent rise of the US dollar since 2014 and its impacts. The strengthening dollar has risen faster than any time since 1974 and is affecting international trade and emerging markets.
- There are several reasons for the dollar's rise, including relatively stronger US economic growth compared to other nations. The rising dollar makes foreign goods cheaper for Americans but US goods more expensive abroad.
- The stronger dollar poses challenges for emerging markets and foreign firms that took on dollar-denominated debt. While some policies like interest rate cuts aim to counter the dollar, they have drawbacks and no quick fixes exist. Long-term reforms around corruption, property rights, and competition could help foreign economies compete.
The document summarizes the economic growth in the 2000s, the emergence of macroeconomic imbalances, and the causes and effects of the global financial crisis that began in 2007-2008. It notes that strong economic growth in the 2000s was driven by exports and investment in developing economies. However, imbalances emerged as some countries ran large trade surpluses while others had large deficits, including the US. The crisis had its roots in the US housing bubble and subprime mortgage crisis but spread globally due to interconnected financial markets and a decline in trade. The crisis led to a drop in global output and rise in unemployment worldwide.
This presentation discusses leading indicators of currency crises. It defines currency crises and reviews different models that attempt to explain them. It then identifies several leading indicators of impending currency crises, including deterioration in the capital account, weakening current account balances, and economic growth slowdowns. The presentation forecasts that Vietnam, Argentina, and Ukraine are countries likely to experience currency crises based on problems like high inflation, overvalued currencies, declining reserves, and slowing economies in each nation.
Despite a bumpy ride throughout 2014, the US economy gained pace while the US equity and fixed income markets outperformed most markets around the world. This performance came with higher market volatility in the US, a rallying dollar, slowing economies in Europe and Asia, and rising geopolitical tensions, including conflicts in Ukraine and the Middle East.
The Dow Jones Industrial Average rose for the sixth straight year, posting a 7.52% gain (price-only return). The S&P 500 Index rose 13.69% (including reinvested dividends), marking the third straight year in which the benchmark has returned more than 10%. The Dow closed at a record high on 38 calendar days, while the S&P 500 had 53 record closes. The non-US markets followed a much different track: All major indices logged negative performance for the year (in USD). The MSCI EAFE Index had a -4.90% return and the MSCI Emerging Markets Index a -2.19% return (net dividends, in USD). The dollar’s strong performance relative to major regional currencies contributed significantly to the lower returns for US investors.
Government bond yields fell across major markets, including the US, where many expected higher rates in response to improving economic growth and an eventual rate increase due to the end of quantitative easing by the Federal Reserve. The yield on the 10-year Treasury note declined to 2.17% by year-end, down from 3.03% in 2013, with lower prices boosting its return to over 4.0% for the year. The Barclays US Government Bond Index returned 4.92%. World government bonds had slightly positive returns: The Citigroup World Government Bond 1–5 Year Index (hedged) returned 1.90%.
Soft Currency is a currency that fluctuates instantly with the fluctuations in the market conditions. Moreover, this type of currency is highly volatile in nature and reciprocates directly to the external and/or internal environment.
To know more about it, click on the link given below:
https://efinancemanagement.com/economics/soft-currency
How Does a Strong Dollar Hurt the US Economy?InvestingTips
http://profitableinvestingtips.com/investing-tips/how-does-a-strong-dollar-hurt-the-us-economy
How Does a Strong Dollar Hurt the US Economy?
A picture of how a strong dollar hurts the US economy comes from the American agricultural heartland. Seeking Alpha notes that the high dollar is raising crop prices and making US farm products less competitive. Consequently farmland price are falling.
Rural bankers remain pessimistic about their local economy, primarily due to the strong U.S. dollar that continues to hamper domestic crops sales on the global market. Respondents in this month’s survey suggested farmland prices were declining more quickly than in past months.
The Rural Mainstreet Index (RMI) lies in the 40s indicating a slide in business and value. The Farmland price index has fallen from 39.4 to 33.4, a stronger indication of decreasing value. The strong US dollar is hurting the agricultural sector and the banks and small towns that depend on agriculture.
Corporate Earnings
The strong US dollar is cutting into US corporate earnings. CNN reports that US corporations need to stop relying on a weak dollar for their profits.
Although the rise in the value of the dollar has been quite substantial over the past 12 months, it has only been in the last four or five months that the impact of this increase on corporate profits has been felt.
The value of the U.S. dollar is expected to stay strong for the near term and even possibly rise higher as the Greek situation in the Eurozone worsens and the Federal Reserve starts to raise short-term interest rates.
The issue of falling profits at multinational U.S. companies will eventually become a political problem if the weakness in earnings continues. This situation occurred in the 1980s as the Paul Volcker-led Federal Reserve tightened up on monetary policy, forcing short-term interest rates to post-World War II highs and causing a major increase in the value of the U.S. dollar.
The strong dollar makes products manufactured in the USA more expensive in offshore markets and therefore less competitive.
Railroads Suffer from Cheap Oil and a Strong Dollar
Reuters posted an interesting article about how cheap oil and a strong dollar hurt railroads.
Low oil prices and the strong U.S. dollar made for a somewhat painful first quarter for major U.S. railroads CSX Corp and Norfolk Southern Corp , and may continue to weigh on their profits.
Both companies derive about a fifth of their revenue from hauling coal, which faces competition from lower-priced petroleum products.
CSX, the third largest U.S. railroad, on Wednesday cut its forecast for 2015 earnings-per-share growth to a mid-to-high single-digit percentage range from double digits.
Chief Executive Officer Michael Ward told Reuters the reduced outlook reflected the impact of the strong dollar, low oil prices and the weak coal market.
Until the price of oil goes up anyone who can use oil or natural gas instead
Bubble Spotting - The East Asia Currency and Debt crisis of 1997Benjamin Van As
During the 1990s, various Eastern Asia economies grew at double-digit figures, and exports grew at well over 10% pa. in some cases.
Then the party ended with a bang as the Currency and Debt Bubble popped, the impact of which could be felt in markets around the world.
This presentation (which forms part of a larger series on Market Bubbles) gives a short overview on what happened.
The Renminbi (RMB) was first issued in 1949 and China instituted a dual currency system in 1978 with the RMB only usable domestically. In the late 1980s and 1990s, China worked to make the RMB more convertible on current accounts. From 1994 to 2005, China pegged the informal value of the RMB to the US dollar. In the 2000s, the US pressured China to appreciate the RMB to decrease Chinese exports and preserve US manufacturing jobs. China resisted due to concerns over affecting exports and jobs. RMB appreciation could impact China's economy, exports, investment, and production while benefiting consumers and potentially creating new jobs through innovation and industrial upgrading.
Japan devalued the yen to boost exports and employment by making Japanese goods cheaper overseas. A weaker yen benefits Japan's export-reliant economy but places pressure on other countries by making their goods more expensive internationally. While helping Japanese businesses, devaluing the yen also risks higher inflation worldwide and flight of bond investors concerned about Japan's large debt levels. China warned that currency devaluation could hurt global growth.
A trade deficit, lower foreign investment, and concerns over economic growth put downward pressure on the Indian rupee in 2014-2015. A Chinese yuan devaluation and foreign investors offloading Indian assets exacerbated the rupee's decline. Lower foreign reserves and a higher demand for dollars to pay for imports further weakened the currency.
The document summarizes the current state of the global economy and key economic perspectives. It notes that world growth has increased since 2002 at its highest rate in three decades. The US economy has played a key role in this recovery, with growth based on expanding domestic demand supported by fiscal and monetary stimulus. However, twin deficits in the US from this growth have contributed to dollar depreciation. Meanwhile, China has shown strong 9% average annual growth over the past decade. Latin American economies have also grown in recent years at over 5% annually on average, though risks remain from potential high oil prices, a slowing Chinese economy, and rising global interest rates.
The document summarizes the causes and transmission of the global financial crisis. It discusses the pre-crisis situation of debt-driven growth, global imbalances, and weak financial regulation. The immediate trigger was the bursting of the US housing bubble in 2006. This led to a collapse in mortgage-backed securities and stock markets. The crisis then spread through remittances, capital flows, and trade to developing countries. Vulnerability to external shocks determined the degree of impact on different countries.
A currency war refers to a situation where a number of nations seek to deliberately depreciate the value of their domestic currencies in order to stimulate their economies. In this presentation we discuss the basic aspects, features of currency war, currency devaluation. We also cover the impact of currency war of affluent nations on Indian economy
B416 The Evolution Of Global Economies Lecture 10 Recent Global Economic Cris...Pearson College London
This document summarizes a lecture on the global economic crisis that began in 2008. It discusses the origins and impacts of the crisis in different parts of the world. It also analyzes responses by governments and how their actions affected the crisis over time, particularly in Europe. Additionally, it provides an overview of financial crises generally, including definitions of currency crises, models of what causes them, the costs of crises, and the typical sequencing of currency and banking crises.
Currency wars occur when countries deliberately devalue their currencies to gain a competitive advantage in international trade and stimulate their economies. While a weaker currency can boost exports and domestic growth, currency wars also carry risks like increased volatility, supply chain disruptions, and rising trade disputes between countries. Both floating and pegged currency regimes are affected, though countries with floating currencies may experience relatively better economic conditions. Overall, currency wars pose risks to global trade and investment from the resulting currency uncertainty and manipulation of exchange rates.
This presentation provides an overview of the Asian Financial Crisis of the late 1990s. It discusses the crisis timeline, including Thailand allowing the baht to float in July 1997 which triggered further currency devaluations across Asia. The document outlines weaknesses in Asian economies that were exposed by the crisis, such as weak banking regulation and reliance on short-term capital flows. It also discusses the impact on various countries and regions, including rising interest rates, falling stock prices, and currency depreciation. The presentation concludes with 14 case study questions analyzing different aspects of the crisis.
The document discusses the US dollar exchange rate and factors that influence it. It provides background on how exchange rates are determined in foreign exchange markets. Recent performance of the US dollar has fluctuated, experiencing a bull market in the late 1990s followed by a bear market through the early 2000s. The value of the US dollar is influenced by interest rates, demand and supply, trade balances, and the rise of the euro as an alternative reserve currency. Pressure from the euro and trade deficits with China and others have contributed to the gradual decline of the US dollar against other major currencies in recent years.
Impact of foreign exchange on the revenue and profit of selected IT companiesRaghav Upadhyay
This document discusses currency fluctuations and their impact on businesses. It begins with an introduction to currency fluctuations, explaining what they are and some of the key factors that cause currencies to rise and fall in value relative to one another. These include economic data, interest rates, news/market sentiments, and the current state of a country's economy. The document then discusses specific examples of how currency fluctuations have impacted economies globally. It also outlines some of the risks currency value fluctuations pose to businesses, such as increased operating costs and difficulty predicting profits/losses. Finally, it discusses strategies businesses can employ to help minimize risks from currency value changes.
Will the US Rebound Cause Another Emerging Markets Crisis?Brien Desilets
1) Past financial crises in emerging markets have often been caused by events in developed markets like the US. As the US economy rebounds, emerging markets may face another crisis if capital flows reverse out of those markets.
2) Many emerging markets remain reliant on foreign financing and currency, leaving them vulnerable to changes in developed markets. However, emerging markets are generally better prepared now than in past crises due to policy and regulatory reforms.
3) Countries like Malaysia demonstrated resilience during the 2008 crisis by requiring large capital buffers and limiting foreign currency lending. Developing local financial systems can help emerging markets insulate themselves from instability abroad.
The document summarizes the February 2011 economic outlook from the Las Vegas Real Estate Club newsletter. It discusses how geopolitical events like the uprising in Egypt are impacting commodity prices and the US dollar. It also summarizes that the Federal Reserve is maintaining low interest rates and quantitative easing. Finally, it provides seven potential investment opportunities to consider, including lower gold exposure, dividend stocks, and cash flow real estate investments in Las Vegas.
The 1994 Mexican Peso crisis occurred when the Mexican peso devalued by 14% against the US dollar. This was caused by Mexico's lax monetary policy, overvalued exchange rate, large current account deficit of 8% GDP, high proportion of short-term government debt held by non-residents, and political issues. The peso devaluation spread to other Latin American and Asian markets as fund managers liquidated investments due to fears of losses. Mexico received a $50 billion financial bailout package from the US, IMF, and other countries to restore stability and regain investor confidence. The crisis showed the need for multinational safety nets and that excessive reliance on foreign capital to finance development can have downsides.
The document discusses the concept of currency wars, where countries compete to lower the value of their currencies to boost exports. It provides background on past currency wars and reasons they occur, such as trade disputes and volatility. Specific examples discussed include China selling US treasuries, Brazil launching an offensive to suppress gains in its currency, and the introduction of the Euro challenging the US dollar's dominance. The effects of currency devaluation like improving trade balances are also summarized.
- The document discusses the recent rise of the US dollar since 2014 and its impacts. The strengthening dollar has risen faster than any time since 1974 and is affecting international trade and emerging markets.
- There are several reasons for the dollar's rise, including relatively stronger US economic growth compared to other nations. The rising dollar makes foreign goods cheaper for Americans but US goods more expensive abroad.
- The stronger dollar poses challenges for emerging markets and foreign firms that took on dollar-denominated debt. While some policies like interest rate cuts aim to counter the dollar, they have drawbacks and no quick fixes exist. Long-term reforms around corruption, property rights, and competition could help foreign economies compete.
The document summarizes the economic growth in the 2000s, the emergence of macroeconomic imbalances, and the causes and effects of the global financial crisis that began in 2007-2008. It notes that strong economic growth in the 2000s was driven by exports and investment in developing economies. However, imbalances emerged as some countries ran large trade surpluses while others had large deficits, including the US. The crisis had its roots in the US housing bubble and subprime mortgage crisis but spread globally due to interconnected financial markets and a decline in trade. The crisis led to a drop in global output and rise in unemployment worldwide.
This presentation discusses leading indicators of currency crises. It defines currency crises and reviews different models that attempt to explain them. It then identifies several leading indicators of impending currency crises, including deterioration in the capital account, weakening current account balances, and economic growth slowdowns. The presentation forecasts that Vietnam, Argentina, and Ukraine are countries likely to experience currency crises based on problems like high inflation, overvalued currencies, declining reserves, and slowing economies in each nation.
Despite a bumpy ride throughout 2014, the US economy gained pace while the US equity and fixed income markets outperformed most markets around the world. This performance came with higher market volatility in the US, a rallying dollar, slowing economies in Europe and Asia, and rising geopolitical tensions, including conflicts in Ukraine and the Middle East.
The Dow Jones Industrial Average rose for the sixth straight year, posting a 7.52% gain (price-only return). The S&P 500 Index rose 13.69% (including reinvested dividends), marking the third straight year in which the benchmark has returned more than 10%. The Dow closed at a record high on 38 calendar days, while the S&P 500 had 53 record closes. The non-US markets followed a much different track: All major indices logged negative performance for the year (in USD). The MSCI EAFE Index had a -4.90% return and the MSCI Emerging Markets Index a -2.19% return (net dividends, in USD). The dollar’s strong performance relative to major regional currencies contributed significantly to the lower returns for US investors.
Government bond yields fell across major markets, including the US, where many expected higher rates in response to improving economic growth and an eventual rate increase due to the end of quantitative easing by the Federal Reserve. The yield on the 10-year Treasury note declined to 2.17% by year-end, down from 3.03% in 2013, with lower prices boosting its return to over 4.0% for the year. The Barclays US Government Bond Index returned 4.92%. World government bonds had slightly positive returns: The Citigroup World Government Bond 1–5 Year Index (hedged) returned 1.90%.
Soft Currency is a currency that fluctuates instantly with the fluctuations in the market conditions. Moreover, this type of currency is highly volatile in nature and reciprocates directly to the external and/or internal environment.
To know more about it, click on the link given below:
https://efinancemanagement.com/economics/soft-currency
How Does a Strong Dollar Hurt the US Economy?InvestingTips
http://profitableinvestingtips.com/investing-tips/how-does-a-strong-dollar-hurt-the-us-economy
How Does a Strong Dollar Hurt the US Economy?
A picture of how a strong dollar hurts the US economy comes from the American agricultural heartland. Seeking Alpha notes that the high dollar is raising crop prices and making US farm products less competitive. Consequently farmland price are falling.
Rural bankers remain pessimistic about their local economy, primarily due to the strong U.S. dollar that continues to hamper domestic crops sales on the global market. Respondents in this month’s survey suggested farmland prices were declining more quickly than in past months.
The Rural Mainstreet Index (RMI) lies in the 40s indicating a slide in business and value. The Farmland price index has fallen from 39.4 to 33.4, a stronger indication of decreasing value. The strong US dollar is hurting the agricultural sector and the banks and small towns that depend on agriculture.
Corporate Earnings
The strong US dollar is cutting into US corporate earnings. CNN reports that US corporations need to stop relying on a weak dollar for their profits.
Although the rise in the value of the dollar has been quite substantial over the past 12 months, it has only been in the last four or five months that the impact of this increase on corporate profits has been felt.
The value of the U.S. dollar is expected to stay strong for the near term and even possibly rise higher as the Greek situation in the Eurozone worsens and the Federal Reserve starts to raise short-term interest rates.
The issue of falling profits at multinational U.S. companies will eventually become a political problem if the weakness in earnings continues. This situation occurred in the 1980s as the Paul Volcker-led Federal Reserve tightened up on monetary policy, forcing short-term interest rates to post-World War II highs and causing a major increase in the value of the U.S. dollar.
The strong dollar makes products manufactured in the USA more expensive in offshore markets and therefore less competitive.
Railroads Suffer from Cheap Oil and a Strong Dollar
Reuters posted an interesting article about how cheap oil and a strong dollar hurt railroads.
Low oil prices and the strong U.S. dollar made for a somewhat painful first quarter for major U.S. railroads CSX Corp and Norfolk Southern Corp , and may continue to weigh on their profits.
Both companies derive about a fifth of their revenue from hauling coal, which faces competition from lower-priced petroleum products.
CSX, the third largest U.S. railroad, on Wednesday cut its forecast for 2015 earnings-per-share growth to a mid-to-high single-digit percentage range from double digits.
Chief Executive Officer Michael Ward told Reuters the reduced outlook reflected the impact of the strong dollar, low oil prices and the weak coal market.
Until the price of oil goes up anyone who can use oil or natural gas instead
Bubble Spotting - The East Asia Currency and Debt crisis of 1997Benjamin Van As
During the 1990s, various Eastern Asia economies grew at double-digit figures, and exports grew at well over 10% pa. in some cases.
Then the party ended with a bang as the Currency and Debt Bubble popped, the impact of which could be felt in markets around the world.
This presentation (which forms part of a larger series on Market Bubbles) gives a short overview on what happened.
The Renminbi (RMB) was first issued in 1949 and China instituted a dual currency system in 1978 with the RMB only usable domestically. In the late 1980s and 1990s, China worked to make the RMB more convertible on current accounts. From 1994 to 2005, China pegged the informal value of the RMB to the US dollar. In the 2000s, the US pressured China to appreciate the RMB to decrease Chinese exports and preserve US manufacturing jobs. China resisted due to concerns over affecting exports and jobs. RMB appreciation could impact China's economy, exports, investment, and production while benefiting consumers and potentially creating new jobs through innovation and industrial upgrading.
Japan devalued the yen to boost exports and employment by making Japanese goods cheaper overseas. A weaker yen benefits Japan's export-reliant economy but places pressure on other countries by making their goods more expensive internationally. While helping Japanese businesses, devaluing the yen also risks higher inflation worldwide and flight of bond investors concerned about Japan's large debt levels. China warned that currency devaluation could hurt global growth.
A trade deficit, lower foreign investment, and concerns over economic growth put downward pressure on the Indian rupee in 2014-2015. A Chinese yuan devaluation and foreign investors offloading Indian assets exacerbated the rupee's decline. Lower foreign reserves and a higher demand for dollars to pay for imports further weakened the currency.
The document summarizes the current state of the global economy and key economic perspectives. It notes that world growth has increased since 2002 at its highest rate in three decades. The US economy has played a key role in this recovery, with growth based on expanding domestic demand supported by fiscal and monetary stimulus. However, twin deficits in the US from this growth have contributed to dollar depreciation. Meanwhile, China has shown strong 9% average annual growth over the past decade. Latin American economies have also grown in recent years at over 5% annually on average, though risks remain from potential high oil prices, a slowing Chinese economy, and rising global interest rates.
The document summarizes the causes and transmission of the global financial crisis. It discusses the pre-crisis situation of debt-driven growth, global imbalances, and weak financial regulation. The immediate trigger was the bursting of the US housing bubble in 2006. This led to a collapse in mortgage-backed securities and stock markets. The crisis then spread through remittances, capital flows, and trade to developing countries. Vulnerability to external shocks determined the degree of impact on different countries.
A currency war refers to a situation where a number of nations seek to deliberately depreciate the value of their domestic currencies in order to stimulate their economies. In this presentation we discuss the basic aspects, features of currency war, currency devaluation. We also cover the impact of currency war of affluent nations on Indian economy
B416 The Evolution Of Global Economies Lecture 10 Recent Global Economic Cris...Pearson College London
This document summarizes a lecture on the global economic crisis that began in 2008. It discusses the origins and impacts of the crisis in different parts of the world. It also analyzes responses by governments and how their actions affected the crisis over time, particularly in Europe. Additionally, it provides an overview of financial crises generally, including definitions of currency crises, models of what causes them, the costs of crises, and the typical sequencing of currency and banking crises.
Currency wars occur when countries deliberately devalue their currencies to gain a competitive advantage in international trade and stimulate their economies. While a weaker currency can boost exports and domestic growth, currency wars also carry risks like increased volatility, supply chain disruptions, and rising trade disputes between countries. Both floating and pegged currency regimes are affected, though countries with floating currencies may experience relatively better economic conditions. Overall, currency wars pose risks to global trade and investment from the resulting currency uncertainty and manipulation of exchange rates.
This presentation provides an overview of the Asian Financial Crisis of the late 1990s. It discusses the crisis timeline, including Thailand allowing the baht to float in July 1997 which triggered further currency devaluations across Asia. The document outlines weaknesses in Asian economies that were exposed by the crisis, such as weak banking regulation and reliance on short-term capital flows. It also discusses the impact on various countries and regions, including rising interest rates, falling stock prices, and currency depreciation. The presentation concludes with 14 case study questions analyzing different aspects of the crisis.
The document discusses the US dollar exchange rate and factors that influence it. It provides background on how exchange rates are determined in foreign exchange markets. Recent performance of the US dollar has fluctuated, experiencing a bull market in the late 1990s followed by a bear market through the early 2000s. The value of the US dollar is influenced by interest rates, demand and supply, trade balances, and the rise of the euro as an alternative reserve currency. Pressure from the euro and trade deficits with China and others have contributed to the gradual decline of the US dollar against other major currencies in recent years.
Impact of foreign exchange on the revenue and profit of selected IT companiesRaghav Upadhyay
This document discusses currency fluctuations and their impact on businesses. It begins with an introduction to currency fluctuations, explaining what they are and some of the key factors that cause currencies to rise and fall in value relative to one another. These include economic data, interest rates, news/market sentiments, and the current state of a country's economy. The document then discusses specific examples of how currency fluctuations have impacted economies globally. It also outlines some of the risks currency value fluctuations pose to businesses, such as increased operating costs and difficulty predicting profits/losses. Finally, it discusses strategies businesses can employ to help minimize risks from currency value changes.
Will the US Rebound Cause Another Emerging Markets Crisis?Brien Desilets
1) Past financial crises in emerging markets have often been caused by events in developed markets like the US. As the US economy rebounds, emerging markets may face another crisis if capital flows reverse out of those markets.
2) Many emerging markets remain reliant on foreign financing and currency, leaving them vulnerable to changes in developed markets. However, emerging markets are generally better prepared now than in past crises due to policy and regulatory reforms.
3) Countries like Malaysia demonstrated resilience during the 2008 crisis by requiring large capital buffers and limiting foreign currency lending. Developing local financial systems can help emerging markets insulate themselves from instability abroad.
The document summarizes the February 2011 economic outlook from the Las Vegas Real Estate Club newsletter. It discusses how geopolitical events like the uprising in Egypt are impacting commodity prices and the US dollar. It also summarizes that the Federal Reserve is maintaining low interest rates and quantitative easing. Finally, it provides seven potential investment opportunities to consider, including lower gold exposure, dividend stocks, and cash flow real estate investments in Las Vegas.
Overview of the Asian currency crisis and the potential for such crisis to occur in other nations including the potential for crisis in the United States. Written in May 2007.
ECO 202 – Written Assignment Scoring Rubric Complete th.docxtidwellveronique
This document provides a rubric for scoring written assignments in an ECO 202 course. It rates assignments across five criteria on a scale from Not Attempted to Exemplary. The criteria include Length Requirements (20%), Mechanics of Writing (30%), Understanding & Application (50%). For each criterion, the rubric describes the standards for Not Attempted, Novice, Basic, Proficient, and Exemplary performance and assigns a corresponding point range.
Chapter 7 The Global Financial CrisisTHE GLOBAL FINANCIAL CRIS.docxbissacr
Chapter 7 The Global Financial Crisis
THE GLOBAL FINANCIAL CRISIS HAD WIDESPREAD EFFECTS. In its early days in September 2008, a trader reacted to the numbers on the floor of the New York Stock Exchange as the Dow plummeted.
Learning Objectives
1. 7.1Evaluate the causes that contributed to creating the financial crisis
2. 7.2Review the impact of the global financial crisis on different world economies, business, employment, and global power shifts
3. 7.3Evaluate the concerns that made different countries respond in different ways to the financial crisis
Financial crises and accompanying economic recessions have occurred throughout history. Periodic crises appear to be part of financial systems of dominant or global powers. The United States was at the epicenter of the financial crisis of 2008–2009. Enjoying a unipolar moment following the collapse of the Soviet Union and the failure of Communism, the United States was confident that economic liberalization and the proliferation of computer and communications technologies would contribute to ever-increasing global economic growth and prosperity. Globalization contributed to the extraordinary accumulation of wealth by a relatively few individuals and created greater inequality. In an effort to reduce inequality in the United States, the government implemented policies that engendered the financial crisis.
As we discussed in Chapter1, is usually the leading force in the growth of globalization. The rise of great powers is inextricably linked to access to investments and their ability to function as leading financial centers, as we saw in Chapter2. Their decline is also closely linked to financial problems. Finance enables entrepreneurs to start various enterprises and to become competitors of established companies. It is also essential to innovation and scientific discoveries. Finance also facilitates risk sharing and provides insurance for risk takers. Countries that have large financial sectors tend to grow faster, their inhabitants are generally richer, and there are more opportunities. Financial globalization contributed to unprecedented growth and prosperity around the world. China and India became significant economic powers, and the industrialized countries grew even richer. Closely integrated into the financial system are banks and investment firms. When the financial system is in crisis, banks reduce lending, companies often face bankruptcy, and unemployment rises. Ultimately, as we saw in the financial crisis of 2008–2009, many banks fail.
The financial crisis triggered a global economic recession that resulted in more than $4.1 trillion in losses, saw unemployment rates that climbed to more than 10 percent in the United States and higher elsewhere, and increased poverty. Stock markets around the world crashed. American investors lost roughly 40 percent of the value of their savings. Housing prices plummeted from their record highs in 2006. Consumers reduced their spending, manufactu.
The Asian financial crisis began in Thailand in 1997 and spread to other Southeast Asian countries and Japan. Thailand's currency collapsed after it floated the baht and faced a severe debt crisis. As currencies and stock markets declined across the region, the IMF intervened with $40 billion for Thailand, South Korea, and Indonesia. The crisis exposed weaknesses from high foreign debt, currency pegs, and hot money inflows in these countries. It took over two years for the region's economies to begin recovering.
Mla style essay one aspect of the current economic crisisCustomEssayOrder
This document discusses inflation as an economic crisis affecting the world. It defines inflation as a general increase in prices of goods and services over time, forcing consumers to pay more for less. The document then examines problems caused by inflation like a loss of monetary value, inability to predict future inflation, and shortage of goods. It also explores causes of inflation such as excess money printing, national debts, rising production costs, and wars. Finally, the document proposes solutions like fiscal and monetary policy controls, and reducing international debt dependence, to curb inflation reoccurrence.
13Brief Literature Review DraftStudent NameP.docxdrennanmicah
13
Brief Literature Review Draft
Student Name
Professor Name
Course Title
Date
Literature Review
Introduction
Report released by CNN explicitly explains the subject of currency manipulation in a diverse way. According to Censky, (2010), currency manipulation is the act of changing the currency value against other currencies instead of leaving it free to fluctuate following the dynamics in the global market Censky, (2010), currency manipulation has a significant impact on the local economy. It is defined by the country’s currency value against the international standards and the exchange rate used.
Katz, (2015) argues that, a country that is actively involved in exports and import has higher changes of facing the economic currency exchange challenges that can prompt manipulation of currency. As outlined in the CNN reports, China is perceived to be on the forefront for currency manipulation. This is report comes as a result of currency valuation report where the Chinese Yuan dropped significantly in 2016 following the US government action on the country’s export surge (Censky, 2010).
Currency manipulation history
The history of currency manipulation streams as early as 1998 when the Chinese government rolled its export trade into the United States following the unification of US and Chinese policies. The first significant of U.S. trade and current account deficits in the post-war era occured in 1971. They were caused, in part, by a series of competitive devaluations by major trading partners in Japan and Europe in the 1960s.
In 2005, the Chinese government reformed its exchange rate system policies. It announced that the RMB would no longer be pegged, and that the RMB exchange rate would become “adjustable based on market supply and demand with reference to exchange rate movements of currencies in a basket” containing various currencies of major developed countries.
From 1947 to 1971, the United States operated under a fixed exchange rate system based on the gold standard, which committed the United States to exchange dollars for gold at $35 per ounce under the Bretton-Woods system of fixed exchange rates. On August 15, 1971 President Nixon suspended the convertibility of gold and imposed a 10% surcharge on all imports (Stewart and Drake 2009).
According to Staiger, & Sykes (2008), the Nixon administration strategized measures aimed at pushing Japan and the members of the European Community to eliminate and revalue the trade boundaries that initially existed. The elimination was a strategic measure to remove those countries with fixative track records and additional contributions to common defense projects by the U.S. allies. Before the end on 1971, the European countries and Japan stood on the agreement to revalue forcing the Nixon to suspend the important surcharge. The following year were significantly impacted with numerous transformations leading to the elimination of Bretton-Woods and gold standard resulting to elevation.
Forecasting of US Dollar value in next 5 years (2022)Yash Dave
Use of ARIMA model (2017-2020) & trend analysis (2021-2022).This research study is focused on forecasting the value of USD index considering the various variable factors that affect it. As a broad gauge of factors affect the same, major 10 factors that affect the USD Index would be taken.
The objective of the research study will be recognizing the implication of those factors on USD Index in the light to past trends.
This section examines the relationship between the Japanese yen and the US dollar over a 12-month period. It finds that the yen appreciated against the dollar, reaching a 14-year high in November 2009, but declined at various points when the Japanese government intervened verbally or through monetary policy to devalue the yen. Key factors that influenced the currency fluctuations included differences in price inflation and interest rates between the two economies, as well as shifting market psychology. The yen's appreciation has economic implications for Japan, such as making exports less competitive and posing challenges for monetary policy effectiveness.
NORMAN, ELTON_BTM7300-12-8
2
NORMAN, ELTON_BTM7300-12-8
1
NORTHCENTRAL UNIVERSITY
ASSIGNMENT COVER SHEETStudent: Elton Norman
BTM7300
Dr. George Ackerman
Scholarly Literature Review
Assignment 8
Faculty Use Only
Hello Elton,
Thank you for submitting your Week 8: Brief Literature Review Draft for my review.
This week is perfect for honing in one a theoretical framework. The theoretical framework is the foundation from which all knowledge is constructed (metaphorically and literally) for a research study. It serves as the structure and support for the rationale for the study, the problem statement, the purpose, the significance, and the research questions.
The theoretical framework provides a grounding base, or an anchor, for the literature review, and most importantly, the methods and analysis. Conduct a brief literature review to find support for your theories. Consider arguments that oppose your beliefs and theories Apply answers to “how” the theory connects to your problem, the study’s purpose, significance, and design.
Continue to work on using more credible and reliable resources as well as APA format. The resources and websites you are cited were not proper in the academic setting. Continue to work on spacing and format with the text and paragraphs. There were a few errors with in-text-citing and grammar once you correct this area you will excel. Review Owl Purdue for more information on in-text citing.
Dr. George Ackerman
12/24/2018
Brief Literature Review Draft
BTM-7300 Assignment # 8
Elton Norman
Dr. George Ackerman
20 December 2018
Currency Manipulation
Introduction
Report released by CNN explicitly explains the subject of currency manipulation in a diverse way. According to Censky, (2010), currency manipulation is the act of changing the currency value against other currencies instead of leaving it free to fluctuate following the dynamics in the global market Censky, (2010), currency manipulation has a significant impact on the local economy. It is defined by the country’s currency value against the international standards and the exchange rate used.
A country that is actively involved in exports and import has higher chances of facing the economic currency exchange challenges that can prompt manipulation of currency (Katz, 2015). As outlined in the CNN reports, China is perceived to be on the forefront for currency manipulation. This is report comes as a result of currency valuation report where the Chinese Yuan dropped significantly in 2016 following the US government action on the country’s export surge (Censky, 2010).
Currency manipulation history
The history of currency manipulation streams as early as 1998 when the Chinese government rolled its export trade into the United States following the unification of US and Chinese policies. The first sign of U.S. trade and current account deficits in the post-war era occurred in 1971. They were caused, in part, by a.
Roger federer (PDF ) current global financial crisis and its implication on ...Fatfat Shiying
This document discusses a research project on the implications of the global financial crisis in the United States for international financial institutions. The crisis originated from the subprime mortgage crisis in the US in 2007. It affected the activities of international financial institutions like the IMF and World Bank. The research aims to evaluate the performance of these institutions before and after the crisis, and identify factors that caused the crisis and its implications. It provides background on the crisis and reviews literature on its causes and effects.
The purpose of this chapter is to contribute to the discussion of a number of issues concerning macroeconomic policies that should be appropriate for developing countries. We shall take into account the broader political picture of changes in the international economy, reflected objectively in terms of the nature of the balance of payments constraints facing the ‘emerging markets’ and specially the Latin American economies since the early 1990s. It is within this wider context that we present our account of the particular case of Brazil.
the Brazilian experience has some peculiarities that make it an interesting testing ground for the presumed benefits of the process of financial globalization and the policies of trade and financial opening.
Many will agree that the slow growth and extremely high inflation experienced in Brazil in the 1980s had much to do with debt crisis and the subsequent interruption of capital flows towards Latin America. Indeed, in what became known as the ‘lost decade’ Brazil experienced a severe balance of payments constraint that slowed growth and triggered the acceleration of inflation. Since the early 1990s, foreign capital started again flowing towards Brazil in large quantities, first mainly as portfolio capital but towards the end of the decade more and more as foreign direct investment. one could well have expected that this large amount of foreign capital would improve ‘quality’ (presumably increasingly ‘cold’ rather than ‘hot’ money), by alleviating the balance of payments constraint, and would have had a big effect on both inflation stabilization and in the resumption of fast economic growth.
However, what the actual record shows is that the impact on inflation stabilization, although starting a bit late, only by mid-1994, was in fact more drastic than anybody could have reasonably expected. Inflation fell spectacularly and has remained extremely low ever since. on the other hand, the growth performance was, to say the very least, extremely disappointing. this chapter will try to make sense of this experience using a combination of some features of the international situation and of particular policies followed by the Brazilian state.
Most Latin American economies followed more or less the same broad pattern of fast disinflation and slow growth with the notable exception of Chile and partial exception of Argentina. therefore the Brazilian story, in spite of its peculiarities, may arguably be seen to reflect a more general pattern.
We shall begin our discussion in the following section with a brief account of the operation of the current international monetary system, a system that we call the ‘floating dollar standard’, and of other salient features of the international trade and financial environment faced by the ‘emerging’ developing economies since the early 1990s. the third section shows how this new international environment affects and changes the nature of the balance
The document discusses the global recession that began in 2007 and its impact on the Indian economy. It provides background on the causes of the recession, including the bursting of the housing bubble in the US and subsequent financial crisis. While India was impacted through lower exports and investment, the effects were less severe than expected due to India being less dependent on exports compared to the 1980s-1990s. The recession led to job losses, lower consumption and economic growth in India. However, some positive impacts included lower commodity prices and a decrease in inflation. Overall, the Indian economy demonstrated resilience but was still affected by the global economic slowdown.
This chapter discusses the global financial environment faced by international marketers. It covers the historical role of the US dollar, development of the current international monetary system including the IMF and World Bank, fixed versus floating exchange rates, factors influencing exchange rates like purchasing power parity and macroeconomic indicators. The chapter also examines economic turmoil in regions like Asia and South America in the 1990s and their impact on trade and currencies. International marketers must understand how financial systems and currency fluctuations affect global business operations and strategies.
The document discusses the 2008 global financial crisis, which originated from the subprime mortgage crisis in the United States. It spread globally, impacting economies worldwide through reduced trade and economic growth. Key effects included a recession in the US and Europe, bailouts of major financial institutions, the collapse of Lehman Brothers, and slowed growth in both developed and developing countries due to contraction of credit and international demand.
In the realm of economic speculation, the hypothetical collapse of the dollar is a topic that garners significant attention and curiosity. While the actual collapse of the world's leading reserve currency remains uncertain, it is worth exploring the potential consequences that such an event could trigger. In this article, we delve into the hypothetical realm, examining the possible ramifications of a dollar collapse. Understanding these scenarios can provide insights into the global economic landscape and foster preparedness for potential future shifts.
The global financial crisis negatively impacted Cambodia's economy through various channels. GDP growth slowed from an estimated 6% in 2008 to a projected 5.1% in 2009 due to declines in investment, exports, and tourism receipts. A multiplier model was used to estimate that the cumulative impact would increase expenditures by $486 million and output by $518 million, dampening but not eliminating economic growth. Other institutions projected 2009 GDP growth between 4.8-6%, with the exact impact depending on assumptions about how severely the crisis affected Cambodia. Overall, the crisis disrupted Cambodia's economy by slowing growth in key sectors.
Similar to Jelena jankovic ( PDF) the fluctuation of us dollar and its effect toward world economy (20)
The document lists the 6 members of a group: Sitti Norafikah binti Mohd Shah, Nur Amirah Salleh, Rafidah binti Ibrahim, Rasidah Mohd Yussof, Nur Azyyati Dzulkaidah, and Jaw Watdi. It then continues with empty bullet points, indicating some type of outline or agenda was meant to be filled in for a group project or meeting.
Presentation labuan international banking tax perspectivesFatfat Shiying
This document discusses Labuan international banking and tax perspectives. It begins with four pre-test questions about Labuan bank products/services, the tax law governing Labuan bank income, taxation of the banking industry in Labuan, and advantages of Labuan banking. It then provides details on banking products/services, taxation framework with 3% tax on profits, tax exemptions, and compliance with international standards like OECD, FATCA. It concludes that Labuan aims to strengthen regional/international linkages and internationalize Islamic finance through leveraging business structures and raising funds in accordance with Shariah principles.
Overview of ibfc banking biz ums 210512 emmFatfat Shiying
This document provides an overview of the banking sector in Labuan, Malaysia. It outlines the types of banks that operate in Malaysia, including commercial banks, investment banks, and Islamic banks. It then focuses on the Labuan banking industry, explaining that Labuan banks are governed by the Labuan Financial Services and Securities Act and can engage in dealings with non-Malaysian ringgit and non-Malaysian residents. The document describes the eligibility criteria and operational requirements for obtaining a full banking license or investment banking license to operate a Labuan bank. It also provides statistics on the performance and growth of the Labuan banking, insurance, leasing, and other financial sectors from 2009 to 2011.
The document provides an overview of Labuan IBFC (International Business and Financial Centre) in Malaysia. It discusses the role and objectives of Labuan FSA (Financial Services Authority), which is the statutory body responsible for developing and regulating Labuan IBFC. The Labuan FSA aims to promote Labuan as an international center for business and financial services. It also acts as the central regulatory authority for the financial services industry in Labuan. The presentation concludes with a brief introduction to doing business in Labuan IBFC, highlighting reasons such as cost effectiveness and product innovation.
This document discusses the strategic planning among Middle Eastern financial institutions in response to the global financial crisis. It outlines how different regions were impacted, including GCC oil exporters, developing oil exporters, and oil importing countries. It also describes the strategic plans used, such as implementing expansionary fiscal policies, increasing oil production capacity gradually, diversifying policies, and applying stimulus packages. The strategic planning helped Middle Eastern financial institutions pursue growth during the crisis and allowed different regions to intervene and recover from impacts in their own ways.
The document discusses the impact of the global financial crisis on financial institutions in the Middle East. It covers several key points:
1) The crisis impacted Middle Eastern countries through declining oil prices, reduced global liquidity, and reversals of speculative capital inflows. This placed pressure on bank funding and tightened credit conditions.
2) Financial institutions in the region had to change their investment strategies and saw repercussions in their stock markets as asset prices fell.
3) The crisis highlighted lessons for the region around regulation and strategic planning. Countries that implemented strategic planning were better able to respond to the crisis.
4) The impact varied across the region depending on factors like economic integration and oil export dependence.
The document discusses the subprime mortgage crisis and its effects on the Caribbean. It identifies several causes of the crisis, including the housing bubble, risky lending practices, and securitization of mortgages. The crisis affected the Caribbean's financial sector, economic growth, tourism industry, foreign investment, and other key areas. While the crisis originated in the US, it slowed economies around the world, including developing countries in the Caribbean region. Government intervention may be needed to mitigate the effects.
This document discusses the causes of the subprime mortgage crisis in the US and its effects on Caribbean islands. The causes included a boom and bust in the housing market, risky mortgage loans, and loose lending practices. The effects on the Caribbean included impacts on trade, tourism, Caribbean financial institutions, foreign direct investment, and remittances. The document reviews literature on these topics and aims to identify the causes and determine the specific effects on the Caribbean economies and sectors.
The document discusses the future prospects of Islamic financial institutions in Malaysia. It provides an overview of Islamic finance principles and products, the role and functions of Islamic financial institutions in Malaysia, and the opportunities and challenges they may face. Specifically, it notes that Malaysia has played a leading role in developing the global Islamic finance industry and regulating domestic Islamic banking. The future prospects for growth appear positive due to government support and liberalization measures, though institutions will need to continue innovating and competing with conventional options.
This document summarizes a student project on the future prospects of Islamic financial institutions in Malaysia. The objectives are to examine Islamic finance principles and products, study the role and functions of Islamic banks in Malaysia, and investigate opportunities and challenges. It outlines the principles of Islamic finance including prohibitions on interest and uncertainty. It also discusses Islamic banking products, regulations supporting the industry, and challenges around developing new services in line with changing needs.
This document compares customers' acceptance of products from Islamic versus conventional financial institutions in Malaysia. It outlines the objectives as comparing their products, identifying benefits and limitations, and analyzing customer decision factors. Islamic products are based on Shariah law and prohibit riba (interest on loans), while conventional products may charge interest. The benefits of Islamic products are being Shariah compliant and generally lower risk, while the limitation is Shariah restrictions. Customer acceptance of Islamic products has grown as the industry has expanded, but full acceptance has not been achieved yet partly due to lack of understanding of Islamic financial products.
1. This document discusses a study that analyzed customer acceptance of products from Islamic versus conventional financial institutions in Malaysia. The study found that while more customers were accepting Islamic products as Islamic institutions grew, some customers still preferred conventional products.
2. The document provides background on the Malaysian financial system, which includes both Islamic and conventional institutions operating in parallel. It outlines some key differences between Islamic and conventional institutions, such as Islamic institutions prohibiting interest and requiring profit/loss sharing.
3. Various Islamic banking products are described, such as Wadiah savings accounts, Mudarabah and Musharakah contracts for profit/loss sharing investments and financing, and Murabahah contracts for cost-plus asset purchases.
This document provides an overview of key differences between conventional and Islamic financial institutions. It discusses how conventional institutions operate based on interest and debt-creditor relationships, while Islamic institutions adhere to Shariah principles that prohibit interest and gambling. Some differences highlighted include how deposits, home loans, overdrafts/credit cards and investments are handled. The document also reviews studies on factors influencing customer acceptance, such as interest rates, risk perception, costs, convenience and religion. Overall, it finds that while products may seem similar, Islamic financial institutions have structural differences to comply with Shariah law.
This document provides an overview of key differences between conventional and Islamic financial institutions. It discusses how conventional institutions operate based on interest and debt-creditor relationships, while Islamic institutions adhere to Shariah principles that prohibit interest and gambling. Some differences highlighted include how deposits, home loans, overdrafts/credit cards and investments are handled. The document also reviews studies on factors influencing customer acceptance, such as interest rates, risk perception, costs, convenience and religion. Overall, it finds that while products may seem similar, Islamic financial institutions have structural differences to comply with Shariah law.
This document discusses a study on customer acceptance of Islamic versus conventional financial institutions. It begins with background on the development of financial institutions since the 1940s. The objectives are to investigate customer acceptance and differences between Islamic and conventional institutions. Key findings are that customer acceptance is related to interest rates, risk/returns, and service quality. Islamic finance prohibits interest and uncertainty while allowing profit-sharing. Conventional finance offers more familiar instruments like mutual funds and mortgages. Overall, the study found a positive relationship between customer acceptance and financial institution products, and that Islamic institutions differ from conventional ones in their ethical foundations.
Small business lending is a specialized area that involves distinctive risks. There are two main approaches to small business lending: relationship management and credit scoring. Relationship management relies on analyzing financials and cashflow projections while assessing risks like key personnel. Credit scoring uses mathematical models to assess applications based on financial ratios and credit history. Both aim to overcome challenges like asymmetric information between lenders and small business borrowers.
1) The document discusses the subprime mortgage crisis that originated in the US and spread globally. It provides background on subprime mortgages and how their proliferation led to the crisis.
2) Key factors that contributed to the crisis included the housing bubble, oversupply of homes, reckless lending practices, the growth of subprime lending, and central bank policies that fueled risk-taking.
3) The crisis had severe effects, including a sharp drop in the housing market, rising mortgage default rates, the bankruptcies of mortgage lenders and investment banks highly exposed to subprime assets, and a global credit crunch.
The document discusses subprime mortgages and their effect on the Caribbean region. Subprime mortgages carried high interest rates and were issued to borrowers with low credit scores or unclear financial situations. This led to a housing bubble in the US as subprime lending increased. When the housing market declined in 2007, it caused a subprime mortgage crisis that impacted Caribbean trade, tourism, remittances, and foreign investment. The document recommends Caribbean countries analyze other industries, maximize advantages, create jobs, and diversify financial reserves to mitigate similar crises in the future.
This document is a group project presentation on the global financial crisis and its impact on international financial institutions in Asia. The group members are listed. The presentation aims to understand the crisis, how it affected institutions in Asia, identify its impacts, and analyze Asia's responses. It provides background on the crisis's origins in subprime lending and discusses effects in different Asian regions, such as profits falling in Japan but China being largely unaffected. It also outlines regional cooperation responses like ASEAN countries joining G20 and establishing the Credit Guarantee and Investment Facility.
The document discusses the global financial crisis that began in 2007 and its implications for international financial institutions in Asia. It provides background on the 1997 Asian financial crisis and details on how Asian countries and banking systems recovered in its aftermath. It then examines how the current global crisis impacted international institutions in Asia and the responses by Asian countries. Key points covered include the effects on countries in East Asia, South Asia, Southeast Asia, and the roles of organizations like the IMF, World Bank, and Asian Development Bank in providing assistance.
Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
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it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
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Jelena jankovic ( PDF) the fluctuation of us dollar and its effect toward world economy
1. Group name: Jelena Jankovic
Group member: Loh Moi Sin, Santhiyah Munisamy, Seela Kumar, Rema Sridaran, Charmilaa
Silvaduray, Goo Wooi Sin
Topic: The fluctuation of US dollar and its effect toward world economy
1.0 Introduction
Movements in the US dollar have important implications for the prospects for world economic growth. This
is because United States is an important destination for exports from other economies. A marked
appreciation of the US dollar, for example, will increase the purchasing power of US consumers, import
demand and so on. Higher import demand in the United States will lead to improved export and also
economic performance in many international economies especially those in Middle East, Asian, and
Australia.
The US dollar has strengthened significantly on a trade weighted basis over the past few years. It’s
related with the appreciation of the currency; import demand in the United States has increased
substantially, leading to a marked widening of the trade imbalance. There has been considerable debate
about the sustainability of the significant increase in the value of the US dollar. If the US dollar were to
depreciate sharply in the short term, there would be adverse effects on world economic growth, and hence
world commodity demand and prices. This is because the world economy is still very much dependent on
the United States as a growth engine. A sharp reduction in US import demand in the near future has the
potential to markedly weaken world economic growth.
Our research divided into four sections which are research motivation and significance, scope of
research, literature review and last is discussion and finding. In scope of research, we mentioned which
countries that we focused on and year that involved in crisis. Our main objective is to study the fluctuation
of US dollar and its effect towards world economy. From research motivation and significance section, we
mentioned that for whom our research report will contribute to. Literature review section is mentioned with
the effects of the crisis toward, Asian, Australia, Africa and Middle East. Last section, discussion and
finding are discussed about the few effects that chose from literature review. Finally we conclude what we
have done in this research.
1.1 Background
1
2. The world economy is currently suffering a global financial and economic crisis that has become severe
since the second half of 2008. This global financial situation was triggered by the subprime mortgage crisis
in the United States, which became apparent from mid-2007. East Asia did not escape. The subprime
mortgage crisis in the United States is far more complicated, for several reasons, than any series of crises
in the past. For example, in the Great Depression of 1929-1930s, the Savings and Loan [S&L] crisis in the
United States. In the 1980-1990, the Long Term Capital Management [LTCM] crisis in the United States in
1998, and the bursting of the Information Technology bubble of 2000-2010.
The current crisis appears unique in the sense that the US dollar, the currency at the epicenter of
the current global crisis, has strengthened against almost all foreign currencies, except the Japanese yen
and the Chinese Yuan. This differs from past experiences when the currencies of the crisis-originating
countries tended to reduce their values against other currencies. This unique situation reflected the
increased demand for the US dollar in the de-leveraging process—mainly through a withdrawal by US
investors from global stock investment. It also reflects the fact that the crisis’s contagion reduced the prices
of almost all financial assets worldwide, so that investors could have regarded some US financial assets
such as US treasury securities as safer than other foreign assets, Shirai (2009).
With respect to the type of currency used, the US dollar and euro were the most frequently-used
currencies for cross-border banking activities However, when only the currencies used in transactions as
foreign currencies were considered, it is clear that the US dollar was the most dominant foreign currency in
cross-border banking activities. Both borrowing and lending conducted by banks operating in the United
Kingdom were dominated by US dollars. Even though the euro was the next most important currency, its
use was relatively limited.
1.2 Objective
1. To study the fluctuation of US dollar and its effects toward Asia.
2. To study the fluctuation of US dollar and its effects toward Middle East.
3. To study the fluctuation of US dollar and its effects toward Australia.
4. To study the fluctuation of US dollar and its effects toward Africa.
1.3 Research motivation and significance
2
3. The research done has combined the fluctuation of US dollar and its effects toward Asia, Middle East,
Australia, and Africa. The report is beneficial to the investors, bankers, and financial sector that active in
mortgage activity. They may more understand about this issue through our report and well plan for their
future financial development. Besides, they also can understand and take this crisis as an experience for
future. Take the history as part for the solution and well prepared for future on it.
1.4 Scope of Research
Asia, Australia, Africa, Middle East and US have the close relationship in the economy aspect. US are the
important support for the economy of those countries. There are a lot of impacts toward those continents
after US dollar fluctuation. Our research on US dollar fluctuation mostly focus in exchange rate, economy,
import & export, commodity, financial market,
2.0 Literature Review
In this section, we will discuss some theoretical evidence put forth by economists. That is addressing
respective theories associated with US dollar fluctuation towards world economy.
There are three directions for the effects of an unanticipated appreciation of the dollar on the
economy. The first channel is on the demand-side through the effects of appreciation US dollar in
increasing imports and decreasing exports. The result is a contraction of aggregate demand. The second
channel is through the effect of appreciation US dollar in decreasing the demand for the dollar as agents
expect the exchange rate to return to its anticipated steady-state value. The result is an expansion of
aggregate demand. On the supply side, appreciation allows producers to buy cheaper intermediate goods.
The result is an expansion of the output supplied. The combined effects of the three channels remain
indeterminate on variables in the labor market, employment and the nominal wage, Mirzaie & Magda (2002)
Mohsen et al., (2010) show that the Africa economic growth was conditioned by the changes in
commodity prices. Commodities in South Africa had plays an important role in their economies which derive
the majority of their merchandise export. The domestic produced good had become highly concentrated by
Africa government. The decline in value of U.S imports from Africa largely reflects the decline in oil price.
The value of total U.S trade with Africa had increased between the year of 2007 and 2008 which had been
gives reflects to commodity price.
3
4. Rogoff and Maurice (2009) said the oil demand and supply have direct relation which United State
financial crisis. Oil was perceived by all customer and oil producers of US. These effects depend on
currency that had been used in transactions linked to oil activities because the oil which has been
purchased is paid using dollar currency. The dollar depreciation generally tends to decrease the oil in
consumer countries which can lead to an increase real income and increase in Middle East oil demand.
The fluctuations of U.S. dollar give direct impact on Iraq’s economy. The exchanges rate within U.S.
dollar gives positive impact into Iraq’s economy. United stated is one of country which is depend on oil
imports had been forced to preserve large stockpiles of dollar because of the status of the United States
dollar as world’s dominant reserve currency and as he currency in which the oil is priced. Increased in
exchange rate will give a negative impact on the real GDP due to Iraq which give negative impact on
exports because relative prices of exported oil become higher, Fezzani & Nartova (2011)
There are three factors that affect the oil price because of movement in dollar effective exchange
rate in Middle Eastern countries. The first factor is changes in oil demand and supply. This change happen
occurs because of have change in dollar exchange rate. However the changes in oil price also can effect
changes in oil demand and supply. The second factor is reserve causality which happen when have
changes in oil price. The third factor is that affect the oil price which occur of movement in the dollar
effective exchange rate is stock of portfolio model, Kandil & Mirzaie (2000)
An increased in export value and volumes for selected products that export by African country
depend to four factor. The first factor is demand and growth and increased price in global and export
market which is related on U.S dollar rate. The second factor is foreign and domestic investment in new
and expanded production capacity. While the third factor is African government policies which able
promoting Sub-Sahara Africa (SSA) into export market and the four factors which can affect U.S dollar
fluctuation toward Africa countries is external policies that provided tariff preferences into African products,
Daniel & Sara (2007)
The sharp increase in US dollar associated with significant capital inflows into the United States.
As US dollar continue to appreciate it has been more than sufficient to finance the current account deficit.
Therefore, due to the increase in the capital inflows, it has allows an increase in spending of both business
and households. However, the slowdown of capital inflows at a later time may lead to the depreciation of
the US exchange rate. According to Jammie and Maurer (2002), depreciation in US dollar would affect the
4
5. world economic growth. A sharp decline in the US dollar will affect the Asian domestic demand to be
weaker and latter trigger a slump in consumer and business confidence. The appreciation or depreciation in
US dollar adversely affect the major world economics like Japan, United States, Western Euro, Non-Japan
Asia, Australia and so forth countries.
Click (2009) mention shat each local currency is tied to some combination of the dollar, yen, euro,
and the pound in the long run. All of it is to clearly define the US dollar standard in the long run relationship.
It mainly focuses on five original members of ASEAN such as Malaysia, Indonesia, Philippines, Singapore
and Thailand. Through the studies, it is suggested that the ASEAN is on dollar standard although it is not
as perfect as it should be. The result shows there is a wide diversity of influence on ASEAN exchange rates.
Hence, the fluctuation influences on ASEAN exchange rate in both long run and short run because the
results shows that the US dollar standard presumed to prevail in ASEAN. The result is difference between
the long run and short run. It is possible for ASEAN to on dollar standard in a short run which evolves into a
pound standard in the long run as competition, trade and capital inflows among the US, UK and even the
euro area causing the bilateral exchange rates to adjust the equilibrium.
The financial crisis which hails in Malaysia has caused numerous impacts to the country’s
economy. It has impact the KLSE (Kuala Lumpur Stock Exchange), impacts on the business confidence
levels, the foreign direct investment, industrial and manufacturing sector, trade and monetary policies and
even the financial sector, Bakar & Ariff (1999). The fluctuation in financial crisis is highly sensitive to
economic fluctuation whereas the GDP shows and upward trend in the number of sales. Thus, to overcome,
it has been suggested to build a good governance and regulatory framework, restructuring and upgrading
the industrial and technology base, also to concentrate in the foreign direct investment and also by
continuing to pursue liberalization.
Khor (2005) said the financial crisis of the fluctuation has led to the depreciation in commodity
export prices. Therefore, in Malaysia the ringgit had been under speculative attack and declined
significantly. There were two mechanisms driving the short-selling. The first, speculator sold the ringgit in
the forward market at the current exchange rate with a view to deliver the ringgit to a future date. Second,
speculator borrowed ringgit in order to sell it presently and hold dollars. This action unknowingly contributed
to the weakening of the ringgit demand as the US dollar increased. However, the currency depreciation had
several negative effects. It has increased the burden of external debt servicing, continues changes in
5
6. exchange rate, the prospect to the continuous decline in the ringgits rate which contributed to the sharp fall
in the value of share in stock market and inflow of foreign portfolio funds.
The yen/dollar exchange rate marked rise in intra East Asian trade followed by a relative decline in
trade with the rest of the world. The question that arises is why the fluctuation in the yen/dollar rate has
such persuasive effects on EA smaller economies. It is because of the dollar pegging before and after the
Great East Asian Crisis. The high frequency pegging in dollar became robust. So, as the yen/dollar
fluctuates the asymmetry between Japan does not peg the dollar and other stage for the synchronized East
Asian business cycle. On measuring the output of fluctuation, in large countries like Japan, China, United
States has influenced the output in East Asian economies. The findings states that the business cycle in
China and US have no impact on the output fluctuation on East Asia countries as the business cycle in the
small EA economy is strong. However, Japan output changes have a significant impact on six countries like
Hong Kong, Indonesia, Korea, Malaysia, Taiwan and Thailand. The estimation shows that either US or
Japan, EA countries may significantly influence the fluctuation in China’s output, Schnabl and McKinnon
(2002).
In Africa, despite the sub-prime crisis, the countries had an excellent economic growth. The strong
economic growth includes the macroeconomics reforms. However, in the pending downturn since 2007,
Africa faces serious uncertainties over its growth and development prospects. Due to the current financial
situation and economic crisis, Africa’s growths have been affected. It has faced a falling in the demand and
prices of commodities, a slump declining in capital inflows. Thus, the global crisis and economic crisis like
dollar fluctuation has an impact on Africa’s banking system, trades, capital inflow in Foreign Direct
Investment and short term private inflow, exchange rates, commodity like textile, mining sectors and so
forth, rising of sovereign debt and collapse in financial market.
Jammie and Maurer (2002) stated that the US dollar fluctuation that the financial crisis results in
effecting on global imbalances which are debated among the economist as well as the policymakers. The
regional financial imperfections and unbalanced growth pattern in emerging market economies and oil
exporters contribute near to the ground global interest rate, discourage monetary policy, and the rickety
political situation in Asian countries. It is confirm that the linkage between Asian economies and the
developed countries remains strong and the financial crisis affects the Asian economies through both trade
and financial channels. In fact, these economies fluctuate drastically in monetary, exchange rate and fiscal
system.
6
7. It stems from a slowdown in the domestic demand in the US about 3.5 percent close to the
cumulative weakening in its GDP. The slow movement arises in both domestic expenditure and private
investment with the fall over to other economies. In this case, Korea suffers the most and then followed by
China, Click (2009). The main factor why China foresees a larger loss than other economies is because of
its implementation of the floating exchange rate regime against the US dollar. They have even mentioned
that the world economies growth has slid significantly not only due to the US slowdown but also because of
individual domestic factors as well as the worsening global economic conditions. To illustrate, a slowdown
in G3 economies which is the US, Japan and the euro area of 1 percent may more than double the losses
suffered by emerging Asia caused by a slowdown in the US alone of the same size, depending on the
policy responses and exchange rate regimes of regional economies.
Eventually, when it happens to face the US dollar fluctuation, it will definitely affect the equilibrium
level of output. It means that the aggregate demand, the amount of goods and services demanded by all
sectors in economy at each level price. So, the US dollar fluctuation will effect and alter the movement
between the price level and demand in each sector. There are several types of spending which are
probably disrupted by the dollar fluctuation. They are the consumption spending, investment spending,
government spending and the net worth, Nartova & Fezzani (2011)
3.0 Discussion and findings
3.1 Impacts on economy
3.1.1 Economy of Ontario
The fluctuation of US dollar has its impact on Ontario, Canada economy as well. The recent slump in the
manufacturing sector was stimulated by the effect of the rising dollar on Ontario exports. Meaning to say,
the impact of the recession together with the economic downturn has result the manufacturers to shut their
business, employees lost their job, consumer has restricted their spending. Therefore, they were an
increase effects on local and province-wide economies.
3.1.2 Economy of India
In terms of economy, the Indian Rupee appreciation against the dollar has impacted heavily on several
factors like export, import and foreign investors. Exports from India are of handicrafts, gems, jewellery,
textiles and so forth items and it is mentioned that the export items contribute substantially to foreign receipt.
7
8. So, when the dollar appreciates highly against the rupee, the exporters stood to gain the $1 which is equals
to Rs.48 but lately due to the appreciation in Rupee the value slopes down to Rs.39.35 equals $1, which
the range drag away the profit margins of exporters and balance of payment services providers to be
similar. Next, toward the imports where the scenario is that the importers do need to pay only Rs 39.35
instead of Rs48. So, we conclude this gain will likely to create savings in cost, which will be passed to
consumers to control the inflation. In addition, the dollar fluctuations do also effect the foreign investment
into India. This is because the foreign investment in India contributes well to dollar depreciation against
dollar.
3.2 Impacts on financial market
3.2.1 Financial market of Asia
Next, the financial market contagions, due to the US dollar fluctuation, the Asian countries had also
confronted by badly hurt of financial sectors apart from the negative effects through trade channels. The
same author comes to explain that the balance sheets of banks are insolvent, therefore the capital outflows
have been out of control and the stock markets have been strained. The financial contagion has been more
complicated and challenging than the international trade where the transmission mechanisms through trade
are much more straightforward. Besides, economies like Japan and Hong Kong in this area have enjoyed
almost perfect capital mobility. However, capital control is still binding on the mainland. It is necessary to
break down the financial channels of propagation in order to fully capture the role they may play in
transmitting the infections as the relative importance of various financial channels can differ across
economies.
3.2.2 Financial markets of Africa
As mentioned earlier, even though African banking system does not indirectly exposed to any subprime
crisis, it has to be note that there were still a strong indication of increased asset price and risk premium
volatility on the financial market in early 2008. Since, Africa is fairly liquid financial market, it has not only
suffered from the contagious effect but also faced amplification and possibly attributable to the over-
valuation of stocks and the outflow of portfolio investments. Therefore, the African as well as the Egyptian
and Nigerian investors have faced an average loss of more than half the wealth invested and it is higher
than the losses bear by the American, French and Japanese markets.
8
9. 3.3 Impacts on banking sector
3.3.1 Asia banking sector
Finally, it comes to the banking sector corruption, as have mentioned in the earlier part the US dollar
fluctuation has damaged the balance sheet of the banks in US by deepening the credit crisis. Therefore,
the complements in other economies have become more risk unenthusiastic and attempt to conserve
capital to decline in international economic outlook and tighten the loan principles. US banks became
unwilling to provide US dollar to their nobles in EMEAP economies, banks in this area have increased their
borrowings in currencies other than the US dollar and actively converted them into the US dollar through
foreign exchange swaps. So, this also contributed to the monetary tightening conditions, policy interest
rates have been concentrated and liquidity conditions have decline, additional weighing on the already
diminishing real economic sectors. Moreover, the credit spread is similar to the external finance premium
relative to a risk-free rate in the framework of a monetary accelerator.
3.3.2 Africa banking sector
Due to the low level of financial integration, African economies were relatively isolated from the direct
impact of the financial crisis. Africa came to find that they are being shielded from the impact of the 2007
sub-prime and the 2008 banking crisis, thereby avoiding the effects of a financial crisis that affected the
very foundation of international financial market. As the Africa’s stock market capitalization is very low,
therefore the low financial integration indicators explained how Africa had escaped both the sub-prime and
banking crises. So, there was no country in Africa announced for the bank rescue and there were no
difficulties reported on African sovereign wealth funds and the eventual impact on their returns.
Furthermore, they have not engaged in complex derivatives products and not heavily dependent on
external financing. The contagion effect was worse only by the entry of foreign bank presence. The foreign
banking institution suffered drastic losses in stock capitalization and profit during the financial crisis.
However, the financial meltdown suffered by the parent bank was not passed down to the African
subsidiaries. The contagion effect of financial meltdown is much weaker compared to the effect on parent
banks. Besides, the sterilization of such reserves and their conversion into foreign assets helped the
countries avoid strong exchange rate appreciation. Nevertheless, sovereign funds are expected to drop, in
line with other financial wealth instruments on the global market. Plus, it is certain that the fall in oil prices
will contribute to a dramatic reduction in the investment capacity and the size of funds.
9
10. 3.4 Credit crisis in Asia
Followed by the flight to quality across borders is the credit crisis spread from the US to other regions. It
has been distressed by the International Monetary Fund that the net capital inflow into emerging Asia will
drop sharply in 2009. Therefore, it has been found that the country risk premium measured as the
sovereign spreads relative to the US treasury bonds. Related to that issue Korea and the EMEAP6 have
faced a large increase in country risk premium while Japan has only seen a modest rise. The flight to
capital may affect an economy by two ways. The first, it would exacerbate the worsening domestic liquidity
conditions and dampen economic growth. Second, by adding depreciation pressure to regional currencies
against the US dollar and may improve trade balance in these economies. Plus, a depreciation of domestic
currency would exert beneficial valuation effects on foreign assets denominated in the US dollar for a
creditor economy and negative valuation effects for a debtor economy.
3.5 Impacts on stock market
3.5.1 Asia stock market
Finally, it comes to the stock market infection and this happens as the third financial channel through which
the US credit crisis spreads to other economies. Eventually, the significant drop in the US stock prices
affects the stock market in other regions. Global institutional investors and hedge funds tried to reduce
exposure to emerging markets where the net equity outflows have hit many regional markets. Firms reduce
their investment and dampen consumption which leads to slower economic growth. As the equity market
play a more important role in firms fund raising in the Asia economics, it is necessary to consider the
relative importance of stock markets in firms financing in each economy.
3.5.2 Africa stock market
A major stock market index which tracks the performance of large companies based South African,
declined 194 points or 2.82 % during the last month. During the last 12 months, the JALSH rallied 926
points or 2.82 %, reaching a high of 34386.97 points in February of 2012 and a low of 29257.97 point in
august of 2011. Historically from 1995 until 2012 the JALSH market value averaged 13931.68 points
reaching an historical high of 34386.97 points in February of 2012 and a record low of 4308.02 points in
September of 1998.
3.6 Impacts on exchange rate
10
11. 3.6.1 Exchange rate in Asia
The fluctuation in dollar produces a great impact to the world economy. It increases the uncertainty for the
forecast of investors and latter effect their decision making process. Therefore, the cost of international
trade transaction will rise according to the exchange rate fluctuation. In such cases, the foreign debtors and
dollar based asset holders will tend to face more severe crash. Despite, the fluctuation in dollar exchange
rate would benefit the international speculative capital of an opportunity, which would make certain the
disturbance at the financial market in most countries.
3.6.2 Exchange rate in Canada and Ontario
Since most of this country’s trade is mostly with the US, the strength of their dollar against the US dollar is
important. Here, the exchange rate is referred to the value of Canadian dollar against the currency of other
countries. There is no set value for their currency as Canada is practicing the floating exchange rate.
Somewhat, the value is being affected by the supply and demand for Canadian dollars in international
exchange markets. Some other factors that might influence the supply and demand of exchange rate
include the interest rates, inflation rates and also the investors’ confidence in Canadian economy. However,
the remark is that the value of the dollar will go up if the demand exceeds supply and vice versa.
3.6.3 Exchange rate in Africa
The volatility of U.S. dollar as a reserve currency also had a strong effect on African currencies. The dollar
rose sharply against all currencies, amplifying the depreciations that were triggered by other external
factors. The dollar gained 11 percent between June 2008 and March 2009, which accounts for slightly more
than half the depreciation in Nigeria, Uganda, and Kenya which about 40 percent of the depreciation of the
Zambian kwacha. Subsequently, the U.S. dollar fell, shedding 6 percent by September from its March peak
with respect to the euro. This matches almost all the appreciation in Kenya and Uganda shillings and about
30 percent of gains in the Zambian kwacha.
The impact of the financial crisis manifested through the currency fluctuation, especially against US
dollar or the Euro. So, the depreciation of some currencies is attributable to the impact of the financial crisis
on commodity prices and the decline in the foreign exchange reserves. To illustrate the situation, the drop
in copper price of 65.8 percent leads to significant fall in Zambia’s foreign reserves. The Zambian exchange
11
12. rate to the US dollar decreases in value sharply in 2008 by 50 percent, although the exchange rate
improved a little at the end of the year.
3.6.4 Exchange Rate Middle East
As oil trade from Middle East Countries such as Iraq, Iran, Saudi Arabia, United Arab Emirates, Libya, and
Kuwait is dominated in US dollars, movement in the dollar effective exchange rate affect the price of oil as
perceived by all countries outside the United States. Hence, change in the dollar exchange rate can cause
changes in oil demand and supply, eventually changes in the oil price itself. Secondly, the reserve causality
can also be found, as changes in oil prices may well influence the effective exchange rate of the dollar. For
example, the exchange rate will value if a country accumulates foreign assets, and this movement occur
without looming its current account balance. It is because the capital income takes over the lost in trade
receipts induced by deteriorated competitiveness. Third, stock of portfolio model also will influenced by the
US dollar fluctuation. They were designed to take account trade and financial interaction between United
States, and Middle East countries.
3.7 Impacts on value trade of Africa
The value of total U.S trade with Africa had increased by about 29% between the year of 2007 and 2008.
After the continuous growth within the three years the value of Africa’s exports to United States decreased
in value by about 57% in the first six months of 2009. U.S exports to Africa decreased in value by about 9%.
The decline in value of U.S imports from Africa largely reflects the decline in oil price from late 2008
through early 2009, as oil and mineral fuel account for about 80% of all U.S imports from Africa, and 92% of
all U.S. import. Petroleum imports did not decrease in volume as dramatically as they did in value, however
the decrease in U.S. and global consumption are likely to continue to have a negative effect on most export
from the region.
3.8 Impacts on commodity
3.8.1 Commodity of Africa
Commodities had play an important role in the economies of most the 24 countries in Western and Central
Africa (WCA), which derive the majority of their merchandise export revenues from one single commodity
or several commodities. Most WCA economies developed positively between 1999 and 2005, although
differences between net oil-exporting and importing countries were clear. Net oil exporters recorded the
12
13. highest growth rates, mainly supported by rising investment and exports on the back of record oil prices
and expanding oil in some countries. Rising oil prices make burden on WCA economies, which often
counteracting benefits accruing from rising prices for their own main export products, Pearson et al., (2007)
In Africa, the commodity exports have been the main driven of growth. The strong growth in
industrialized and emerging countries like India and China has been an important factor of the increase of
prices and demand for commodities. The financial crisis adversely had a negative impact on the world
growth prospects and seriously dampened the expectation on commodity futures markets, including falling
prices and demand for most commodities. For example, the price of crude oil dropped by 65 percent from
USD 125.73 per barrel to USD 43.48 in January 2009. The impact of the crisis on exports commodity prices
and resources inflows threatens to reserve the gains from the recent economic performance of African
economies. The consequence are such as declining reserves, non-profitability of some oil fields that have
high extraction costs, reduction in government funding capacity and cancellation of postponement of a
number of investment in extractive industries which is highly dependent on foreign direct investment.
3.8.2 Commodity of Australia
According to Penm et al., (2002), world commodity prices are mostly denominated in US dollars. As a result,
depreciation of the US dollar against the currencies of commodity importing countries is equivalent to an
increase in these countries’ purchasing power. Let’s assume other things are unchanged. The increases in
the purchasing power would provide support for commodity prices on world markets.
Agricultural commodities
Exports of food products have been growing rapidly in recent years as consumer incomes have increased
in importing countries. Given the relative significance of the effects, the analysis is focused on the
implications for international agricultural markets.
Grains
Wheat’s world indicator price was getting higher. This result that world demand for wheat is
relatively less sensitive to changes in incomes. Consequently, the increases in the purchasing power of
wheat importing countries would more than offset the adverse effects of lower income growth. It also
reflected lower income growth and a sharply weaker US dollar. These increases in wheat imports, together
with a reduction in wheat exports, would lead to an increase in wheat prices on international markets. The
13
14. United States is the world’s largest exporter of coarse grains which was accounting for more than 40 per
cent of world sales.
Livestock products
For livestock products, there would be downward pressure on world prices because of the
relatively higher sensitivity of demand for these products to changes in income growth. Beef imports for
Asia as a whole have declined. Over the past year, beef consumption in Japan has been adversely affected
by the confirmation of BSE (bovine spongiform encephalopathy or ‘mad cow’ disease). After initially falling
by around 70 per cent following the first confirmed BSE case in September 2001, beef consumption in
Japan remains weak, with a year on year declined of 23 per cent in June 2002. Given current weak
consumer confidence, a significant weakening in Japan’s income growth in the near future could result in
more significant declines in both beef consumption and imports. A sharply lower import demand from Japan
would place significant downward pressure on prices in Pacific markets. Around half of the Australian wool
exports to China were processed and then exported as textiles and apparel to other countries. Australia
also exports a significant proportion of wool to Western Europe, Korea, Taipei and Japan. While demand
for apparel and wool could increase marginally in Western Europe, lower income growth in the United
States, Japan and other Asian countries would adversely affect the demand for apparel, leading to reduced
demand for Australian wool.
Wool prices were denominated in Australian dollars, the direction of movements in the Australian
exchange rate. Against the major importing countries, it also has an impact on international demand for
Australian wool. A depreciation of the Australian dollar against the euro, the Japanese yen, and other Asian
currencies would help to partly offset the adverse effect on wool consumption of lower income growth in
these regions. But a sharply lower value of the US dollar would weaken apparel, and hence wool demand
even more in the United States. Against the US dollar, the prices received by Australian exporters declined
for wheat, coarse grains, oilseeds, dairy products and beef.
Mineral resources
A sharp depreciation of the US dollar would adversely affect world demand for mineral resources.
Consumption of these products in the major world economies is sensitive to changes in general economic
14
15. activity, especially to changes in industrial production. Lower world income growth would place significant
downward pressures on demand and prices on world markets. The downward pressures of lower income
growth on world mineral resources prices would more than offset the support provided by an increase in the
purchasing power of importing countries. That was as a result of a sharply lower US dollar. For Australian
producers of mineral resources, the adverse effects of lower world prices seriously affected by a possible
appreciation of the Australian exchange rate against the US dollar.
The impact on the price of gold might be different from other mineral resources Gold is also an
investment asset in addition to the demand associated with fabrication. When the US dollar depreciates
sharply, investors could switch funds away from US dollar denominated assets and toward gold. This could
place upward pressure on the price of gold. The United States is the destination for Australia’s exports of
mineral resources. In 2001-02, Australia’s main minerals and energy exports to that country included oil
and gas, aluminum, iron and steel and refined zinc. The United States is the destination for Australia’s
exports of crude oil, aluminum and iron and steel and exports of refined zinc. Although the United States is
not a major importer of Australian minerals and energy commodities, lower import demand for
manufactured products in the US market would adversely affect the demand for mineral resources in its
major trading partners.
3.9 Impact on commodity export and import of Africa
3.9.1 Commodity export
South African exports were worth 56.3 billion ZAR February of 2012. South Africa has rich mineral
resources. It is world’s largest producer and exporter of gold and platinum and also exports a significant
amount of coal. Another major export is diamonds. South African’s major exports partners include United
Kingdom, United States, Germany, Italy and Japan.
Export goods or services are provided to foreign consumers by domestic producers. It is a good
that is sent to another country sale. Export of commercial quantities of goods normally requires involvement
of the customers authorities in the both the country of export and the country of import. The advert of small
trades over the interest such as through e-Bay have largely by approved the involvement of customers in
many countries due the low individual of these trades. These unimportant exports are still subject to legal
restrictions applied by the country of exports.
15
16. 3.9.2 Commodity import
South Africa imports were worth 63.7 billion ZAR in February of 2012. South Africa imports mainly
machinery, foodstuffs, equipment’s, chemicals petroleum products and scientific instruments. An import is
any good or services brought into one country in legitimate fashion, typically for use in trade. Import goods
or services are provided to domestic consumers by foreign producers. An import in the receiving country is
an export to the sending country. Imports were along with exports, from the basis of the international trade.
Import of goods normally requires involvement of the customs authorize in the both country of import and
the country of export and often the subject to import quotes tariffs and trade agreements.
16
17. 3.10 Impacts on Middle East
3.10.1 Oil sales
Middle East countries are well known as large oil producers. Most oil sales especially in Middle East are
dominated by United States dollar (USD). This fact had been supported by proponent of the petrodollar
warfare hypothesis; because according to the hypothesis most countries which are depend on oil imports
had been forced to preserve a large stockpile of dollars in order to continue their imports. These countries
need to preserve large stockpiles of dollar because of the status of the United States dollar as the world’s
dominant reserve currency and as the currency in which oil is priced, Fezzani & Nartova (2008)
The impact of US dollar effective exchange rate is seen on oil demand and supply, since it affects
the price of oil which is produced by Middle East countries. The oil was perceived by all customers and oil
producers outside of US. These effects depend on currency used in different transactions linked to oil
activities. Moreover, the US dollar fluctuation also effect on demand. The oil which has been purchased are
paid using dollar.
However, demand depend on the domestic price for consumer countries which usually change
according to dollar fluctuation. Therefore, the dollar depreciation can reduce the oil price in domestic
currency for countries with a floating currency. The dollar depreciation generally tends to decrease the oil
price in consumer countries. Based on this situation, it can lead to an increase in their real income and
increase in their oil demand. Therefore, the dollar depreciation prior has a positive impact on oil demand
and should contribute to raise the price.
On the other hand, the US dollar fluctuation also can effect on supply of oil. Normally, the oil
company use domestic currency of procedure countries to pay their employees, taxes, and other cause
which the currency are often linked to the dollar because of the fixed exchange rate regimes adapted by
most producer countries. As a consequence, dollar changes perhaps affect the price as perceived by the
producer than the one perceived by demanded.
Besides that, dollar depreciation can also cause inflation and reduce the income in oil producer
country because the currencies are linked to the dollar. Organizational of petroleum exporting country
(OPEC) that import a lot of from United States is less affected than countries that import more from Europe
17
18. or Asia. The increase inflation and the decrease in purchasing power reduced the real disposable income
and therefore available for drilling, everything else equal.
Overall, the dollar depreciation may result in a deduction in oil supply. The dollar effective
depreciation cause an increase in oil demand and the deduction in supply, mainly on the long run which
tends to boost oil price. According to Ariff & Abubakar (1999), the increase in oil price stems from to
simultaneous factors, first is strong surge badly anticipated of oil demand particularly in United States.
Second is, dwindling investment in the oil sector that lead to stagnation of production capacity. However,
those demand and supply effects the dollar depreciation which associated to a drop in oil price, not raise.
The dollar depreciation required to stabilize the US external position. However, it is not complete since it
overlooks the multilateral natural of exchange rate, Kandil & Mirzaie (2002).
3.11 Impacts on bonds
3.11.1 Middle East bond
The economic conditions in the United States create a consistent demand for USDs and upward pressure
on the USD’s value. This situation allows the US government gain revenues through issuing bonds at lower
interest rates. As a result the U.S. government able run higher budget deficits at more sustainable level
compare to other countries. The stronger USD will able make the imported goods into United States are
relatively cheap, Bahami-Oskooee et al., (2010)
3.11.2 Government bond of Africa
A government bond is a bond issued by a national government denominated in the country’s own currency.
Bond issued by national governments in foreign currencies is normally referred to as sovereign bonds.
Africa’s government’s bond yield for 10 year notes declined 0 basis points during the last 30 days which
means it became less expensive for Africa to borrow money from investors. During the last 12 months,
Africa government bond yield declining 0.26 %. From 1997 until 2011 South Africa’s government bond yield
for 10 year notes averaged 10.83 % reaching an historical high of 20.69 % in august of 1998 and a record
low of 7.14% in February of 2006. Generally, a government bond is issued by a national government and is
denominated in the country’s own currency. Bond issued by national government in foreign currencies is
normally referred to as sovereign bonds. The yield required by investor’s to loan funds to governments
reflects inflation expectations and the likelihood that the debt will be repaid.
18
19. 3.12 Impact on Australian dollar
An important factor of the impact on Australian commodity exports is movements in the Australian dollar.
There would be considerable uncertainty surrounding the direction of movements in the Australian dollar
when US dollar in sharp depreciation. While a sharp decline in the value of the US dollar would lead to an
appreciation of the Australian exchange rate, weaker world economic growth, and hence lower world
commodity demand, could place considerable downward pressure on the Australian dollar. Weighing these
opposing effects, a possible outcome is that the Australian dollar would appreciate against the US dollar.
3.13 Impacts on importers and exporters
As usual the fluctuation has a direct effect on Ontario’s business as well mainly to the importers and
exporters. For example, let’s assume company exports sports accessories to the United States. It will cost
more for an American to buy the accessories if the Canadian dollar rises. This will definitely result in
smaller amount of sales for the Ontario’s company. Therefore, if the company keeps its prices constant to
maintain the market share, it makes less profit on each sport accessories that are being sell. Hence, if the
dollar falls, the situation is vice versa. The sport accessories are a better deal for better selling and there
will be an increase in profit margin.
3.14 Impact on consumer in Ontario
In this term, the rising dollar benefits not only the company for their good business but also the customer as
the saving can be passed on. The Canadian exports now contain about 40 percent imported content. As a
result, it can be said that a higher dollar lowers the cost of the imported components which offset the effect
on the business of the export price. The Ontarians keep a careful track of the fluctuating dollar because a
stronger Canadian dollar means greater purchasing power. In fact, a falling dollar can impact the consumer
very much because the purchasing power is reduced when the Ontarians are obliged to pay more in
Canadian dollars for imported goods. As the prices mounts the Bank of Canada may require increasing the
interest rates to control inflation.
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20. 3.15 Impact of labor market in US dollar appreciation
3.15.1Demand-side
The dollar appreciation decreases the price of foreign goods relative to home goods, decreasing the
demand for home goods. So, the producer will less produce product and direct reduce the labor. In the
labor market, the reduction in labor demand is likely to increase unemployment and moderate nominal
wage inflation. The evidence indicates that the deflationary effect of dollar appreciation is more dominant
on the nominal wage in manufacturing and transportation industries. More importantly, dollar appreciation
decreases the international and domestic demand for U.S. products.
3.15.2 Exchange rate
That sharp appreciation of the dollar is responsible for the decline in tradable sectors like manufacturing,
agriculture, and forestry products and the relative growth in non-tradable sectors such as services,
construction, transportation, and public utilities. Along this line, examines the effects of exchange rate risk
across major sectors of international trade. The results demonstrate that the exchange rate risk has a
negative impact on trade. He also found that the agriculture sector is more sensitive to the exchange rate
risk compared to the manufacturing sector. Changes in the exchange rate can significantly influence the
profitability and performance of U.S. manufacturing industries.
3.15.3 Supply side
On the supply-side, changes in the exchange rate, both anticipated and unanticipated, determine the cost
of importing intermediate goods. As the dollar appreciates, it is cheaper to buy intermediate goods from
abroad. The price of energy is paid in dollars. That is, the change in the exchange rate of the dollar does
not affect the cost of imported energy to the United States. So, the producers are inclined to increase
imports of intermediate goods, increasing the marginal product of labor. Concurrently, the reduction in price
decreases the cost of living and, hence, workers’ demand for higher wages.
4.0 Impacts on Korea, Thailand, Indonesia and Philippines
This part only 4 Asian countries being discussed. Here we have been discussing the various impacts in
these 4 countries which affected seriously in economy crisis.
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21. 4.1 Korea
The impact of International Monetary Fund (IMF) has shown a sign of recovery in areas as current account
surplus, trade surplus, debt restructuring and chaebols’ ( big corporation in Korea) announcement of
restructuring plan. However, the Korean government, companies, labor had to share bitter realities that
were imposed upon the IMF crisis as well.
High interest rates
The chaebols offers interest up to 30 percent on their corporate bonds to attract takers. Three
months before the crises, the small and medium companies has already suffered more because of the
rates that have doubled. High interest rate signals a sign pointing a big deterioration in the business climate.
Debt burden
Through what I have explained earlier, it means that due to the borrowing of fund ‘rescue packages’
from IMF, Korea had to face high debt insolvency. Weak currency give Korean chaebols extra burden on
interest payment to foreign investors. Korean debt total estimated of $150 billion was found the biggest
among those of Indonesia ($130 billion), Thailand ($100 billion), Philipines ($60 billion) and Malaysia with
$40 billion.
Massive layoff
The massive layoff grabs the public fears on their future. The absence of government welfare
system like US and Western European countries was the reason for the public fears. The unemployment
rate increase from 2.5 percent before crisis to 6.5 percent after the economic crisis.
Untested presidential Leadership
This means that as the Korean’s president thought by electing Kim Dae Jung who is an untested
leader has a pledge to push the chaebol to restructure and pass laws allowing layoffs. However, there was
still doubt whether economic advisers will be able to push hard on key issues. To that the government
intervention has been accelerated rather that diminished. Therefore, the corrupt alliance between the
chaebol and government has not broken.
21
22. 4.2 Thailand
Thailand was one of the countries which affected rapidly in the economy crisis. The increasing price of oil
which it imported and the downturn in the commodity prices had seriously affected their exports on
commodity. Therefore, when the interest rates started to increase dramatically, Thailand like other
developing countries became encumbered with an unsustainable foreign debt burden. So, that was a result
for Thailand which forced to seek for the support of the International Monetary Fund (IMF) to have a
structural adjustment program. Sooner they have to face a number of consequences like a chronic current
account deficit and weaknesses in financial system, followed by foreign exchange crisis to the stock market
crisis and property market crisis which leads to banking crisis. Thus, all this has been a led to the economic
and political crisis in Thailand.
Chronic current account deficit
Thailand deficit was 8 percent of GDP in 1995, 7.9 percent in 1996 & 1997. This is the reason
caused the country to rely heavily on external borrowing.
Excessive external debt
Thailand have to face an estimated of $US 99 billion debt, about 55 percent of its GDP. Therefore,
the majority of this debt was privately incurred and this large external debt sharply lifted the country’s debt
ratio.
Collapse of the property sector
With the loan increasingly becoming more expensive and hard to get under the Bank of Thailand
which had squeeze on lending and that is where the property sector began to collapse. These have
worsened developer’s cash flow troubles and defaults on interest payment. As a result, many finance
companies and small banks faced liquidity problem.
Political instability
Chavalit Yongchiyudh had lost his administration in November 1997 as through his ruling the
economic performed very poorly in economic management. The economic team has lacked unity and
common goals which latter failed to deal with the mismanagement by the technocrats. Therefore, the
22
23. confidence of foreign and domestic investors slipped away and the economy continued to worsen after the
election until today.
4.3 Indonesia
The IMF approved US 35 billion for reform programs in Indonesia, Korea, Thailand, Philippines and
Malaysia. However, Indonesia was augmented by additional US$ 1.3 billion from IMF and US$ 5 billion
from multilateral and bilateral services. IMF allowed Indonesia to put a limit of only US$ 5 billion per
customer on forward foreign currency trading between banks and non-residents. Consequent to this
packages Indonesia had to suffer the upcoming contagion from the procedure.
There were high interest rates entailed by the IMF programs had effect on the private sectors
capability. The financial liberalization affected countries without prudential regulations was a serious
mistake. IMF should have discouraged such liberalization till appropriate regulatory regime was in place.
There was also improper safety net development due to rapid trade liberalization. Inflation had involved in
the crisis for fuel, food and financial system.
4.4 Philippines
The Philippines was a special case as its economic development program has been based on neoliberal
principles promoted by the IMF and the World Bank. So, it did not begin as a response to the recent crisis.
However, due to the chaos which had defeated the other Asian countries like Indonesia, Malaysia, Korea,
Thailand and other related countries. Philippine was also pulled into the economic crisis circulation. There
were several impacts in macroeconomic and social sectors.
Effect the asset market
There was an immediate impact on the liquidity squeeze in international capital markets.
Consequently, the impact had a sharp drop in equity prices and exchange rate volatility. It has also
influence the real sector on production and expenditure sectors. Plus, the stock market volatility has also
effect the macroeconomic stability which has its implication for the private investment.
23
24. Affect the financial sector
It had put pressure on financial market especially in economics with high foreign participation in
local equity markets, banking systems that depend heavily on short-term foreign currency trading. This
undoubtedly, remains the Philippine in vulnerable to further shock that emanate from global financial crisis.
Influence the household and communities
This is related to the layoffs, experienced in wage reduction and so forth social disabilities. Hence,
there happen to be a significant downward movement in income from employers as well as from business
itself which lead to the poverty alleviation.
4.5 Malaysia’s situation
When Thailand currency collapsed in July 1997, the economic crisis spawned spread rapidly to its neighbor
including Malaysia, Indonesia, Philippine and Korea. To some extent, Malaysia was better prepared to face
the crisis instead. In Malaysia, the ringgit came under speculative attack and thence to decline. However,
the country had not liberalized its capital account to the same extent as what the other three countries.
Therefore, the local companies were allowed to obtain foreign loans only with Central Bank permission,
which would be given only if the borrower could show that the loan would be used for those activities which
can yield revenue in foreign exchange that could used for loan servicing. As a result of the restriction,
Malaysia’s debt situation remained manageable. To illustrate, Malaysia had a very less debt than the other
countries because Malaysia borrowed less amount of financial support from IMF and later applied a fixed
rate of US currency which is $ 3.8.
4.6 Indonesia’s situation
The debt situation in Indonesia is quiet a serious matter. Indonesia has borrowed heavily from 1967 till
1998 under the General Suharto power ruling. The total external debt owned by Indonesia $141 billion.
However, the financial crisis made it difficult for Indonesia to pay off its debts. In fact, the rapid fall in the
value of Indonesia currency which also meant the debt to be paid in foreign currency became twice as
expensive. Indonesia is officially classed as middle income country by the World Bank as the country’s
average daily income per person is over $2.36. So, it is not eligible for the Heavily Indebted Poor Countries
Initiative or the Multilateral Debt Relief Initiative or for any other additional assistance from the UK or other
creditors. To narrow the point, Indonesia needs cancellation of its illegitimate and odious debt. The
24
25. campaigners says that it is unfair for the people of Indonesia to keep paying and bearing the burden of
debts on loans which had never beneficial to most people.
4.7 Philippines’ situation
The total debt of Philippine is about $ 61.5 billion. Most of the debts were accrued during the presidency of
Ferdinand Macros from 1965 to 1986. He then fled the country in February 1986 during the first People
Power when the country had amassed a foreign debt of $ 28 billion. However, the Philippines tax payers
will continue to pay the foreign debts of Macros until 2025 it means 59 years he assumed office and 39
years after he was overthrown. The deal was surrounded by allegations of corruption and the plant was
built on an earthquake fault line at the foot of a volcano. Meanwhile, the Philippines’, a third of who live in
poverty paid millions of dollars every day for this power plant until 2007 when the debt was finally paid off.
This is because the Macros and all did well financially out of the plant which has never produced any
electricity. In line, the New Economic Foundation calculates that the Philippines requires 63 percent debt
cancelation in order for the government to meet the basic needs of its citizen such as health, education and
other infrastructure without taxing those living below an ethical poverty line of $3 a day.
4.8 Korea’s situation
As to Korea, through a comparative look at the national debt figures against GDP reveal that the South
Korea’s debt is at too little of 34 percent. Nevertheless, Korea did not come out of the 2008 downturn
despite have survived from the Asian financial crisis hits in 1998 due to various economic reforms. So, as in
2008 the South Korea GDP dipped to 2.2 percent and then to 0.8 percent and the 2010 forecast had
projected at 5 percent. In consideration, it is believed that if the country stays firm with that figure they
would be able to retain their position as the 15th largest economy in the world. The development of Korean
debt dynamics points at a potentially unstable debt path, that the level of the debt ratio was quite low
compared to Thailand and Malaysia. Hence, in its Budget 2012, the finance ministry of Korea have state
that the yearly growth will be in the range of 1 percent in the first half period due to the debt situation in
Europe. The budget strategy of the national government in the initial half of 2012 is expected to cushion the
national economy from the aftereffects of the debt crisis in the Euro zone.
25
26. 4.9 Thailand’s situation
The result was much convincing for Thailand compare to Malaysia over the debt dynamics. Similar to
Korea, the Thailand debt increased substantially prior to 1997. The gap between investment and domestic
savings increased six fold. To illustrate, the average amount of debt was mention to be 116,681 Baht which
was about 6.3 times of income where in general it was found that income inequality has decreased from the
year 2006. Therefore, it is highly recommended to the particular country to take an appropriate action on
the problem of household living cost especially for the poor.
Thailand it is reported that there were slightly down in the Bank of Thailand’s monthly financial and
economic prior to the flood damage. As a result the country has to suffer the effects in terms of it exports,
industrial and agricultural production which cause damage and felt to the global economic recession. As for
the balance of trade there was a surplus of US$ 200 million and the foreign currency reserve at the end of
November was recorded at US$ 178.3 billion, slightly lower compare to the previous month which was
down about US$ 3.7 billion than November. According to the Asian Development Bank (ADB), they see a
fairly vigorous growth in the Philippines as well in other Asian emerging economies. The IMF, recently sees
the ASEAN 5, composed that the Philippines, Indonesia, Malaysia, Thailand are posting an average growth
of 5.2 percent this year and predicted to be 5.6 in the 2013 on the back of the prolonged crisis in the Euro
zone. In Malaysia, Indonesia, and Thailand and in Korea the income had rose seven fold, climbed from 10
percent to 27 percent today. The origins of Asia rapid growth have been fervently argued and it is what
taken on new energy with the onset of the financial crisis. Eventually, there is some observers suggests the
aftermath of the crisis that these countries like Korea, Indonesia, Malaysia, Philippines and Thailand and so
forth was at rapid development, somehow an illusion that either never really happened of has been
completely wiped out by the crisis.
International Monetary Fund (IMF)
IMF (International Monetary Fund) is a policies that given important to foreign countries to control of Asian
countries. According to Martin Khor, these policies had be one of the greatest fears to a country which had
been forced to seek IMF assistant. It is because the policy conditions that come with such loan can bring
the end of the nation’s economic sovereignty. These fear are already become reality in Thailand and South
Korea, where the conditions attached to their IMF loan have led to policy changes that cover the way for
foreign institutions to take over the domestic financial sector as well as other parts of their economies. The
26
27. foreign banks and companies are already going though the remains of these economies and begin to pick
up local assets and institutions at bargain prices. The IMF policies that had imposed on Thailand and South
Korea allow higher foreign ownership on their economy, especially in financial sector. The market access
conditions were believed to place in the IMF package at the perseverance of the United States. Besides of
its deal with IMF, Thailand had been asked to allow foreign banks to own more equity in local banking
sector.
While Indonesia, IMF allowed to put a limit of only US$5 million per customer on forward foreign
currency trading between banks and non-resident. IMF committed for tight monetary policy and
comprehensive package of structural reform prepared in corporation with the World Bank. On October 31
an impressive program of macroeconomic adjustment and structural reform were formed by IMF which
included strong monetary and fiscal policies designed to bring adjustment in the economy and restore
confidence to financial market, its consist of a major restructuring of financial sector to ensure for future
soundness, and it involve significant deregulations measure and trade reforms.
Besides that, Philippines had embarked on a successful IMF-supported program of
macroeconomic adjustment and structural reforms in the late 1980's and early 1990's, which seems to have
enabled it to weather the crisis at a relatively lower cost in terms of output loss, unemployment and social
displacement. Crisis management after mid-1997 was sound, and the Philippines adapted its policies,
including through the floating of the peso, tightening of monetary policy and strengthening of the banking
system. It eventually relaxed its fiscal and monetary policies as stabilization took hold in mid-1998. In the
Philippines, recent macroeconomic developments have also been favorable. Recovery is well under way
with real GDP growth of 3.25 percent in 1999, led by a rebound in agricultural production from a severe
drought in 1998. Monetary policy is helpful of continued recovery, and interest rates are now below pre-
crisis levels, while foreign exchange reserves have risen to the level of short-term debt (on a residual
maturity basis) as the current account surplus increased to almost 9 percent of GNP in 1999. Bank balance
sheets are also being strengthened. The budget deficit had been allowed to increase to support recovery,
but fiscal policy has shifted toward consolidation in 2000 given the need to reduce the relatively high level
of public debt.
The IMF was called in to provide financial support for three countries most seriously affected by the
crisis: Indonesia, Korea, and Thailand. The strategy to address the crisis had three main components which
are finance, macroeconomic policies and structural reform. For example in financing, some US$35 billion of
27
28. IMF financial support was provided for adjustment and reform programs in Indonesia, Korea, and Thailand,
with the assistance for Indonesia being augmented further in 1998-99. Some US$85 billion of financing was
committed from other multilateral and bilateral sources, although not all of this financing actually
materialized. In addition, concerted action was taken (at different stages after the start of these programs,
in different countries) to stem private capital outflows. While in macroeconomic policies, monetary policy
was tightened (at different stages in different countries) to halt the collapse of the countries' exchange
rates--which went well beyond what might have been warranted by fundamentals--and to prevent currency
depreciation from leading into a spiral of inflation and continuing depreciation. The monetary tightening was
appropriately temporary: once confidence began to recover and market conditions stabilized, interest rates
were lowered. Fiscal policy was essentially to be held firm in the case of Indonesia and Korea, while in
Thailand a fiscal tightening was planned to reverse an increase of the deficit the year before the crisis.
Besides that, in structural reforms the steps were taken to address the weaknesses in the financial and
corporate sectors. Other reforms were intended to alleviate the social consequences of the crisis and set
the stage for a resumption of growth.
Conclusion
This paper shows that the fluctuation US dollar affects the economy of Asian, Africa, Australia and Middle
East country. We also examined the relationship between fluctuations US dollar between these countries.
The fluctuation of US dollar had brought lot of impacts to the world economy. It had affected the economy,
exchange rate currency, exports and imports, commodities, financial market and so on. The seriously
affected countries had to face huge losses. Some countries even faced high debt which was billion of
dollar. There were few countries which had borrowed lot of money from IMF to cover the debt especially
Korea and Thailand. The financial crisis had brought the very good experience to the economy world. The
countries which affected have learned the way to solve the economy problems and protect their economy
systems. This may let them avoid the same problems in the future.
28
29. Limitation
There is little limitation in the research. Firstly is payment. Refer to the expert research to have a strong
justification over the points we are discussing about. Hence, to hold such a piece of journal which have is
related to the topic, a payment is needed to purchase the copyrights. Second is lack of prior research
studies that related to the topic. Somehow, it might lead to the wrong or unrelated corner of the information
we need. So, in order to capture the vital information it needs time to go through one by one journal. It
needs patience in order to stare and read all the information carefully to understand and obtain the main
points from the paragraph. Third is sources constriction. Even by following the technology update, we are
still subtitled under the sources constriction as they are limited by the size of the collection. For example,
searching and reading only few of the online sources does not enough, instead we have to check in to
several websites which is reserved for its copyright and even then it is not sure we could have the
information. This is because most of the sources are patterned and it needs its membership to log in as the
payment is still considered. Lastly casual remark, for this kind of current issues related research, it is quite
hard to make any casual remarks or conclusion as it is restricted for the real-life connection.
29
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