What is hedging? Hedging is a strategy used to protect risks posed by worldwide currency fluctuations. One hedges the currency risk by contracting to sell foreign currency in the future‚ at the current exchange rate (Fries). If fund managers think the dollar is going to be stronger when they are ready to change the foreign currency back into American dollars‚ then they take out a foreign futures contract (a hedge). Thus‚ they lock in the exchange rate beforehand‚ so that they will not lose profits
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Prepared by: SEOKE L.J. ASSIGNMENT TOPIC: a weak currency or a strong currency for the South African economy? What are the pros and cons of a weak currency or a strong currency in South Africa? Discuss. A. Introduction Cartoonists in South Africa have a long-running joke that shows a bruised and feeble coin‚ the rand‚ being beaten up by two muscled thugs‚ the dollar and the pound. In 2001 South Africa ’s currency was knocked down by two-fifths against the greenback‚ much of it in
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CHINA’S RENMINBI: “OUR CURRENCY‚ YOUR PROBLEM” Due at 12:30 pm‚ Oct 31‚ 2012 Please submit your answers ELECTRONICALLY by group to huangyr.08@sem.tsinghua.edu.cn Part I Answer the following questions based on the material of the case (BEFORE year 2007) 1. Why are Japan‚ the newly industrialized economies (.NIEs.) and developing Asian countries less vocal than the US on the valuation of the RMB? 2. Present a balance of payment to understand the internal and external flows‚ and analyze the different
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Contents 1) Find the distribution and report the mean and the standard deviation of the uncertain revenue in $ 1 2) What is the probability that this revenue will exceed $ 2‚250‚000? 1 3) What is the probability that this revenue will exceed $ 2‚500‚000? 1 4) What is the probability that this revenue will be less than $ 2‚150‚000? 1 5) What is the probability that this revenue will be less than $ 2‚000‚000? 1 6) HSBC offers to pay a sure sum of $2‚150‚000 in return for the
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(1.What is meant by the term?) Introduction Over 50 years ago on 1960‚ when a sprawl bed of liquid gas was discovered in North Sea‚ Netherland overjoyed exploiting the natural resource and became a net exporter of gas. The demand for Dutch guilder in order to purchasing gas‚ rose and made it extremely strong. It left a lot of currency to a level the manufacturing export was no longer competitive. Later on 1970‚ when oil price soured by 4 times; UK was tempted to invest in North Sea oil industry
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QUESTION #1 Does the Universal Circuits’ Irish controller have a convincing argument for the weakness of the dollar? Why or why not? How would you interpret the evidence? The controller of the Irish division does have a valid point when stating that the U.S. dollar is in a vulnerable position due to the fact that its trade deficit is currently in excess of $100 billion and growing. (see Exhibit 1). While Universal Circuits’ chief financial officer‚ Joe Merrill‚ is correct when stating that
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Table of Contents: • Introduction • Debit • Credit • BOP must be in equilibrium • Balance of payments in Pakistan • Causes of adverse balance of payments • Measures to correct BOP • Conclusion Introduction: Balance of payments refers to sum of both the balance of visible and invisible items. The balance of Payment is a comprehensive annualrecord of economic relation of a country with the rest of the world during a given period of time. A balance of
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Russia Exchange rate system Russia used to pledge its nominal exchange rate with some main currencies such as US dollar. However‚ the Russian crisis has forced Russia to develop managed floating exchange rate system‚ where the exchange rate driven by market forces of the Ruble’s demand and supply with the help of government intervention. With this exchange rate‚ the government can ensure stability and predictability of ruble exchange rate and prevent abrupt fluctuation of the Ruble rate. Moreover
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Impact on business changes in the economic environment Introduction- In this report I will describe and then explain how the GDP‚ inflation‚ interest rates and employment rates are affected by the growth and recession stage of the business cycle. I will also explain how the balance of payments is and how Tesco’s contributes to trade surpluses/deficits. I will also be stating what the conflicting objectives are of Tesco’s and how they affect them as a business whilst describing‚ the ripple effects
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Global Financing and Exchange Rate Mechanisms Veronica L. Powell University of Phoenix MGT/448 Donald Joseph March 31‚ 2009 Global Financing and Exchange Rate Mechanisms Currency is unreliable. In some countries the United States dollar is worth more than that countries currency‚ while in other countries the U.S. dollar is worth less. The exchange rate fluctuates on a continuous base which makes the term “funny money” more realistic each day. The purpose of this paper
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