pound sterling were disengaged. A float exchange regime was established by India. Effective rate of rupee was placed on a controlled‚ floating basis and linked to a “basket of currencies” with trading partners of India. In 1993 Liberalized exchange rate system (LERMS) was replaced by the unified exchange rate system and a system of market determined exchange rate was adopted. However‚ the RBI did not relinquish its power to intervene in the market to control the Indian currency. In India
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Research Paper Exchange rate volatility‚ stock price fluctuations and the lending behaviour of banks in Nigeria Mbutor O. Mbutor Research Department‚ Central Bank of Nigeria. E-mail: mbukor@yahoo.co.uk. Accepted September 9‚ 2010 Following the recent global economic crisis‚ so many macroeconomic maladjustments have unfolded in the Nigerian economy. First‚ the naira exchange rate depreciated sharply and became more volatile than any other time in nearly a decade; the stock market indices have
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Accounting (Translation) Exposures Foreign Exchange Exposure – measures the potential for a firm’s profitability‚ net cash flow‚ and market value to alter because of a change in exchange rates. Q: What are the three main foreign exchange exposures? A: 1) Transaction Exposure 2) Operating Exposure 3) Accounting Exposure Transaction Exposure – measures changes in the value of outstanding financial obligations incurred prior to a change in exchange rates. Operating Exposure (Economic
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trustee in the execution of international loan agreements‚ and engages in extensive economic research. The BIS is involved in traditional types of investment. Any funds not needed as loans to other central banks are placed in global financial markets. The main forms of investment include commercial bank deposits and purchases of negotiable commercial paper short-term treasury bills including the United States. International cooperation BIS provides a forum for the leaders of certain banks. The
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purchase a currency futures contract for the currency that it will be required. A forward hedge differs from a futures hedge in that forward contracts are used instead of futures contract to lock in the future exchange rate at which the firm will buy or sell a currency .An exposure to exchange rate movements need not necessarily be hedged‚ despite the ease of futures and forward hedging. Based on the firm’s degree of risk aversion‚ the hedge-versus-no-hedge decision can be made by comparing the known
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12 FOREIGN EXCHANGE EXPOSURE AND RISK MANAGEMENT LEARNING OBJECTIVES 1. Introduction 2. Foreign Exchange Market 3. Market participants 4. Nostro‚ Vostro and Loro Accounts 5. Exchange Rate Determination (a) The Spot Market (b) The Forward Market 6 Exchange Rate Quotation 6.1 6.2 6.3 6.4 American Term and European Term Direct and Indirect Quote Bid‚ Offer and Spread Cross Rates 7. Exchange Rate Forecasting 7.1 Techniques of Exchange Rate Forecasting
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of today‚ South Africa has relied on foreign capital inflow for the purpose of sustaining high levels of growth through investment in the various sectors of the country. This great reliance on foreign investment has made South Africa vulnerable to fluctuations in the exchange rate and other global conditions. This essay will discuss the extent to which South Africa is reliant on foreign capital‚ reasons why this is so and the nature of these inflows. Exchange rate issues will also be discussed‚ with
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its yen payables‚ should it use the call option with the exercise price of $0.00756 or the call option with the exercise price of $0.00792? Describe the tradeoff. The corporation needs to purchase supplies with foreign currency. To hedge against the possible appreciation of the foreign currency’s value‚ the corporation can purchase a call option. Both options have to pay a premium for the option. The purchase price or exercise price of option A is $0.00756 plus a premium paid on this respective
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foundation as a colony. What has changed is the size‚ direction and influence of these transfers‚ especially since 1980. There are a number of factors that have aided this transformation. They include: The expansion of new markets foreign exchange and capital markets are linked globally. They operate 24 hours a day with dealings any where in the world possible in real time. Financial deregulation and the floating of the Australian dollar since 1983 intensified the impact of globalisation on
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Firm • What’s special about international finance o Foreign Exchange Risk ▪ The risk that foreign currency profits may evaporate in dollar terms due to unanticipated unfavorable exchange rate movements. o Political Risk ▪ Sovereign governments have the right to regulate the movement of goods‚ capital‚ and people across their borders. These laws sometimes change in unexpected ways. o Market Imperfections ▪ Legal restrictions on the movement of goods
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