1994‚ China pegged its currency‚ Yuan to US dollar at an exchange rate of $1=8.28 Yuan. The exchange rate policy was implemented to prevent balance of payment crisis and US is considered as one of the most influential currency in the global market. By this method‚ China gain rapid economic growth and foreign capital inflows. The stable and lesser risk have attracted many foreign company to invest in china as they can plan and make decision ahead. The undervalued Yuan have helped China to become one
Premium Foreign exchange market United States dollar Currency
Chapter 07 Foreign Currency Transactions and Hedging Foreign Exchange Risk Multiple Choice Questions 1. According to the World Trade Organization‚ what was the size of international trade in 2008? A) $7‚000‚000‚000 (7 billion dollars) B) $70‚000‚000‚000 (70 billion dollars) C) $37‚000‚000‚000 (37 billion dollars) D) $16‚000‚000‚000‚000 (16 trillion dollars) Answer: D Level: Easy LO: 1 2. In the years between 1990 and
Premium Currency United States dollar Foreign exchange market
ECON 0602: Lecture 5 Topics China and the WTO WTO and its rules China’s entry to the WTO Trade frictions China’s Foreign Trade: Special Issues China’s FTA: CEPA Sino-US trade imbalance China’s exchange rate Export and employment 1 © HKU ECON 0602 Larry QIU 2/153 What is WTO? China and the WTO: Questions/issues General Agreement on Tariffs and Trade (GATT‚ 1947-1994) What is WTO? 1947‚ Geneva‚ 23 (including China)‚ now 148+ Most Favored Nation Principle
Premium International trade World Trade Organization
you think the Chinese government originally pegged the value of the Yuan against the U.S. dollar? What were the benefits of doing this for China? What were the costs? I believe that the Chinese government originally pegged the value of the Yuan against the US dollar as an attempt to compete with the U.S. and the rest of the world. The US dollar was the strongest in the global market. The benefits for China were that their yuan would stay weak‚ and their exports would remain cheap while their
Premium Investment United States dollar Foreign exchange market
Chinese government originally pegged the value of the yuan against the U.S. dollar in an attempt to compete with the U.S. and the rest of the world. Because China is an export driven economy‚ the government thought exports would be less expensive with the pegged value of the yuan. This is a possible benefit of pegging the value of the yuan against the U.S. dollar or any other foreign currency. Therefore‚ the pegged exchange rate undervalued the yuan by as much as 40%. This fueled a boom in Chinese exports
Premium Foreign exchange market Currency Exchange rate
with newer models. Tianfu spent 1‚815‚000 yuan (RMB) to develop a prototype for a new PDA that has all the features of the existing PDA but adds new features such as cell phone capability. The company has spent a further 390‚000 yuan for a marketing study to determine the expected sales figures for the new PDA. Tianfu can manufacture the new PDA for 150 yuan each in variable costs. Fixed costs for the operation are estimated to run 4.5 million yuan per year. The estimated sales volume is 70
Premium Depreciation Cost Personal digital assistant
company conducted business (Italy for example) the company had almost no expenses there‚ and had to convert all the Yens it generated from selling its merchandise to dollars. In the last few years‚ the Yen appreciated against the dollars‚ making the company’s lack of hedging strategy have little to no impact on the bottom line. However‚ there are several signs that suggest that the Yen might become susceptible to weakening due to several geo-political reasons: 1. The weakening of the Mexican peso
Premium Forward contract Futures contract Revenue
the direct quotes. That is: $ number of dollars required = (number of foreign currency units required) ∗ . forex Given the direct quotes given‚ we find: A part (a) (b) (c) B # of forex units required 10‚000 2‚000‚000 50‚000 forex CD yen francs C = A*B ($/FC) # of direct dollars quote required 0.8437 $8‚437.00 0.004684 $9‚368.00 0.5139 $25‚695.00 (We have used the spot quotes in all cases.) Note that‚ in all cases‚ there are fewer dollars than foreign currency units. This is because
Premium Currency Forward contract Exchange rate
20). Yum! Restaurants international opens 1000th kfc in china. Retrieved from http://biz.yahoo.com/bw/040116/165552_1.html Shao‚ A. T.‚ & Herbig‚ P. (1994). Marketing implications of china ’s ’little emperors ’. Review of Business‚ 16(1)‚ 16-16. Yen‚ Z. (2005). The competitive position of london as a global financial center. London‚ UK: Corporation of London.
Premium Fast food
formal hedging policy. The company however did not have a substantial competitive exposure hedging policy in place. Over the last year (2001 in case study) GM was trying to properly evaluate the risk to the substantial yen denominated assets it held. The value of the yen relative to the dollar was decreasing and GM had considerable exposure to this. In conjunction with this depreciation affecting the unit sales‚ GM has a significant stake in Suzuki‚ Isuzu and Fiji as well as a $500 million bond
Premium Japan General Motors Investment