| Revaluation of Yuan | | | 2/16/2011 | A mini case study | | Prepared by Angela AgostinacchioAmerican University of DubaiSpring : International Finance Management2011 | | | Revaluation of Yuan synopsis On 21st July 2005‚ Sun rose from the east with shocking news. China government and People’s Bank of China officially changed the value of their currency and thus removed its peg with US dollar. Prior to the revaluation‚ $1 U.S. dollar bought
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Exchange Risk Currency risk is also called the foreign exchange risk or foreign exchange exposure‚ refers to a period of international economic transactions in foreign currency-denominated assets (or creditor) and liabilities (or debt)‚ caused by fluctuations in the exchange rate and its value will go up and possibilities. Risk of stake-holder including government‚ enterprises‚ banks‚ individuals and other sectors‚ they are facing the risk of exchange rate fluctuations. Classification 1. Transaction
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EXCHANGE RATES The exchange rate is the price of one country’s currency in terms of another country’s currency Quoted exchange rates can be either direct or indirect‚ Direct: home currency per unit of foreign currency 39 Rupees per US Dollars 80 Rupees per Pound Indirect: foreign currency per unit of home currency 0.0255102 US Dollar per Indian Rupee 0.491594 Pound per Indian Rupee Appreciation of Currency Currency Appreciation means that the given currency
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Introduction of the Gold Standard The Gold Standard era started from 1870 to 1914. With the help of historical accidents centering on Britain‚ Britain tied the pound sterling more closely to gold than to silver. In addition‚ Britain’s UK dollar became the supplier of reserve currency. Under the gold standard‚ each country’s government fixed its currency to a specified quantity of gold‚ and promised full convertibility to gold. Each country’s government would sell and or buy gold
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mass unemployment and post war economic policies. The article “Gold standards and the great depression” by Barry Eichengreen and Peter Temin focuses on gold standards and its consequences on business exchanges. The limitation of the gold standard systems crippled many countries as they struggled to keep up with the economic crisis and changes in the economy in the 1930s. Policy makers continued to impose their gold standard mentality that further deepened the economic stress and increased economic
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qualifications. This also becomes a plus for companies who want skillful workers because it allows them to be selective in there candidates for hire. The extinction of frictional unemployment would keep people in the same jobs for life‚ creating rifts in a system that suppresses innovation and rusticates skills. More importantly‚ frictional unemployment matches the demand for workers with the supply. The last several years our nation has struggle with this barrier because of lack of education or not enough
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use of gold bars allowed convenient handling and storage. Industrial use:- The most important industrial use of gold is in the manufacture of electronics. This includes: cell phones‚ calculators‚ personal digital assistants‚ global positioning system units and other small electronic devices. Gold is known to have been used in dentistry. Gold is used as a drug to treat a small number of medical conditions Gold is also used as a lubricant between mechanical parts. it is the metal associated
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BOP in India has evolved greatly manner which reflects both the changes in the development and the exogenous shocks that it went through from time to time. In the long span from 1951-52 few events have made huge impacts on the BOP of India‚ one of them being the BOP crisis of India in the year 1991. Post-independence India had sought a development strategy. India had adopted the inward looking and highly interventionist strategy. Until the 80’s the current account in India was in a surplus and the
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South Africa‚ they face adversity continuously. As for their ecological and economical status‚ they rank as the highest nation with biodiversity in the world. As for South Africa’s legislation‚ they face a few boundaries with their mixed/hybrid gal system. South African trade policy is composed due to their composition and aggregate growth of trade. South Africa has a mixed economy with high rate of poverty and low GDP per capita. The have a large mass media sector that commonly uses the English language
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policy designers should opt for a flexible exchange rate system. Nations‚ however‚ which do not have such policy makers should opt instead for a fixed exchange rate system. When attempting to stabilize an economy‚ monetary policy is the most efficient weapon that policymakers possess (Weerapana‚ 2003). In other words‚ it is much simpler to enact monetary policy than fiscal (Weerapana‚ 2003). Some nations benefit from a fixed exchange rate system‚ however. Nations such as Brazil‚ Kenya and Turkey
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