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Bo p, disequlibrium


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Balance of payment, disequlibrium

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Bo p, disequlibrium

  2. 2. Balance of Payment Systematic and summary record Shows country’s economic and financial transaction with rest of the world Measures over a period of time.As on 25/08/2012,foreign exchange reserve $297 B downby $258 M
  3. 3. Table- Balance of Payments accountCredits(+) (Receipts) Debits(-)Payments Current AccountExports Imports(a) Goods Goods(b) Services Services(c) Transfer payments Transfer payments Capital AccountBorrowing from Lending to Foreign CountriesForeign countriesDirect InvestmentsBy Foreign countries Direct Investments in Foreign countries Official Settlements AccountIncrease in Foreign Official Holdings Increase in Official Reserve of Gold and Foreign Currencies Errors and Omissions
  4. 4. BoP for April-June (Q1) of 2010-11
  5. 5. DISEQULIBRIUM Inequality in the amount of foreign exchange of one country with the rest of the worldSURPLUS SUPPLY DEMANDDEFICIT SUPPLY DEMAND
  6. 6. Causes of disequilibrium in BoPTemporary causesNational IncomeInflationEconomic DevelopmentBorrowing and LendingChange in exchange ratePolitical factors-like instable govt.
  7. 7. Correction of BoP disequilibriumAutomatic correction Deliberate measuresMonetary measures Trade measures Miscellaneous measures Export promotion Import control
  8. 8. Monetary MeasureMonetary contraction/expansionDevaluation/valuationExchange control
  9. 9. Miscellaneous measureForeign loansIncentives for foreign investmentsTourism developmentIncentives for foreign remittancesImport substitution
  10. 10. Export promotion Import controlAbolition/reduction ofexport duties • Import dutiesExport subsidies • Import control • Import prohibitionExport incentives
  11. 11. General measureExchange depreciation (price effect) or devaluation(by government)Deflate the currencyTariffsImport quotasExport duties
  12. 12. …………QUESTION?