Search results “Fluctuation of exchange rate”
What Influences Exchange Rates?
You may have crossed an international border recently and have had to exchange your money from your local currency to another. Or you might have purchased goods online from a shop based overseas. Or you might be trading in the foreign exchange market. Chances are, you've dealt exchange rates before. In fact, if you've done any of the above, you’re a small factor in influencing exchange rates. To read a full analysis, visit the following page: https://www.hiwayfx.com/forex-hub/what-influences-exchange-rates
Views: 29150 HiWayFX
What is Exchange Rate : Explained with Animation
This Video Explains the following: 1)Exchange Rates. 2)Why the value of Currency Fluctuates. 3)How the value of a currency is decided. 4)How Demand of Goods influences the Value of a Currency. For More Animated Explanations under 5 minutes, Subscribe to Science Digest. (Suggestions/Errors, please let us know. We appreciate it.)
Views: 73117 Science Digest
How Exchange Rates Work
● We explain topics simply. So Subscribe if you want to learn while being entertained. ✔ Please like the video and comment if you enjoyed - it helps a lot! ▶ If you want a question answered then ask in the comments and we may make a video about it! About the video: You may have traveled a lot and wondered why you get more of one currency when you exchange it for another. If so, you have witnessed exchange rates in action, but do you know how they work? Watch the video to find out what exchange rates are, how to convert between them and the different systems which determine a currencies exchange rate. Historically the gold standard system had been used, which fixed currency to a select value of gold, held in a vault. The three main systems are the floating, managed and fixed exchange rate systems. The floating system has minimal government intervention, using supply and demand to determine the exchange rate. The managed exchange rate is allowed to be within a permitted band and a fixed exchange rate is usually pegged to a currency with the interest of being competitive in the international market. The video explains this in more detail and with helpful picture to guide you through the subject.
Views: 418496 SimplyExplain
How Exchange Rate Fluctuations Affect International Businesses
In today's episode, we're going to discuss how currency exchange affects businesses that trade internationally. Video by Sofia Kluge (https://plus.google.com/+SofiaKluge/posts) More information at: http://www.mycurrencytransfer.com/blog/2014/02/how-do-exchange-rates-affect-small-businesses-3991
Factors Causing Currency Changes
This topic video looks at some of the factors that can cause a current appreciation or a depreciation in the foreign exchange market. For more help with your A Level / IB Economics, visit tutor2u Economics http://www.tutor2u.net/economics If you find this topic video helpful, please SUBSCRIBE to our YouTube Channel For more help with Economics: Follow tutor2u Economics on Twitter: https://twitter.com/tutor2uEcon - - - - - - - - - MORE ABOUT TUTOR2U ECONOMICS: Visit tutor2u Economics for thousands of free study notes, videos, quizzes and more: https://www.tutor2u.net/economics A Level Economics Revision Flashcards: https://www.tutor2u.net/economics/store/selections/alevel-economics-revision-flashcards A Level Economics Example Top Grade Essays: https://www.tutor2u.net/economics/store/selections/exemplar-essays-for-a-level-economics
Views: 7238 tutor2u
Factors That Influence Currency Exchange Rates
Factors That Influence Currency Exchange Rates
Views: 7918 kali modak
Measuring Exposure to Exchange Rate Fluctuations
Description Not Provided.
Views: 2341 gopala vasudevan
Main Factors that Influence Exchange Rates
The exchange rate is one of the most important determinants of a country's relative level of economic health. It plays a vital role in trade, which is critical to most free market economies.
Views: 1614 AllIn
Currency Appreciation & Depreciation - How it Affects the Economy | Economics
In this video we will learn what is Rupee appreciation and depreciation. It is also referred to as currency devaluation and revaluation. You must have read it in the newspaper that rupee has become stronger or weaker or crashed or gained some points against the American dollar. All of this simply means that the value of rupee has either increased or decreased against the American Dollar. This topic is part of Macroeconomics. Currency Appreciation & Depreciation has a huge affect on a nation's economy. It drives Foreign Direct Investment FDI, increases foreign reserves and it also affects a country's import and export. Fill this feedback form for a better learning experience https://goo.gl/vrYPBw Click here if you want to subscribe https://www.youtube.com/user/TheRealSengupta Maps and sketches can be found on the instagram account search for "geographysimple"
Views: 26204 Amit Sengupta
Effects of a Currency Depreciation
This revision tutorial video looks at some of the macroeconomic effects of a currency depreciation including the impact on the trade balance, economic growth and inflation. It includes an explanation of the J Curve and the Marshall Lerner Condition. For more help with your A Level / IB Economics, visit tutor2u Economics http://www.tutor2u.net/economics If you find this topic video helpful, please SUBSCRIBE to our YouTube Channel For more help with Economics: Follow tutor2u Economics on Twitter: https://twitter.com/tutor2uEcon - - - - - - - - - MORE ABOUT TUTOR2U ECONOMICS: Visit tutor2u Economics for thousands of free study notes, videos, quizzes and more: https://www.tutor2u.net/economics A Level Economics Revision Flashcards: https://www.tutor2u.net/economics/store/selections/alevel-economics-revision-flashcards A Level Economics Example Top Grade Essays: https://www.tutor2u.net/economics/store/selections/exemplar-essays-for-a-level-economics
Views: 17601 tutor2u
Floating vs. Fixed Exchange Rates- Macroeconomics 5.4
Float it or fix it? Mr. Clifford expalins the difference between floating and fixed exchange rates and how countries peg the value of their currency to another currency. Make sure to watch this video first: https://www.youtube.com/watch?v=9DVYVfI81R8
Views: 282415 Jacob Clifford
Impact of Exchange Rate Appreciations and Depreciations with Evaluation
Exchange Rate Changes Impacts (Appreciation and Depreciation) - The impacts of appreciations and depreciations of an exchange rate with evaluation
Views: 43298 EconplusDal
Foreign Exchange Rate Risk
Understand the risks and opportunities associated with trading foreign currencies
Views: 4959 Shad Morris
Currency Exchange Introduction
Introduction to how exchange rates can fluctuate More free lessons at: http://www.khanacademy.org/video?v=itoNb1lb5hY
Views: 562284 Khan Academy
Economic indicators and their impact on currencies | tradimo
This video will introduce you to two of the most important economic indicators that drive the value of a currency: interest rates and inflation. Interest rates are one of the most important drivers of the forex markets. Inflation measures how quickly the prices of goods and services rise in a given period of time. Join tradimo.com and learn to trade for free. Read articles and watch live coachings to master your trading skills for free. We're a team of expert traders with the dream of building the best school and community for online trading. Learn to trade, invest and manage your personal finance: https://learn.tradimo.com/
Foreign Exchange (FOREX)- Macro 5.2
Mr. Clifford explains the market for foreign exchange and national currencies. If you want more practice watch this video: https://www.youtube.com/watch?v=9DVYVfI81R8
Views: 434664 Jacob Clifford
Subject :Economics Course :Undergraduate Keyword : SWAYAMPRABHA
Imports, Exports, and Exchange Rates: Crash Course Economics #15
What is a trade deficit? Well, it all has to do with imports and exports and, well, trade. This week Jacob and Adriene walk you through the basics of imports, exports, and exchange. So, you remember the specialization and trade thing, right? So, that leads to imports and exports. Economically, in the aggregate, this is usually a good thing. Globalization and free trade do tend to increase overall wealth. But not everybody wins. Crash Course is on Patreon! You can support us directly by signing up at http://www.patreon.com/crashcourse Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever: Mark, Eric Kitchen, Jessica Wode, Jeffrey Thompson, Steve Marshall, Moritz Schmidt, Robert Kunz, Tim Curwick, Jason A Saslow, SR Foxley, Elliot Beter, Jacob Ash, Christian, Jan Schmid, Jirat, Christy Huddleston, Daniel Baulig, Chris Peters, Anna-Ester Volozh, Ian Dundore, Caleb Weeks -- Want to find Crash Course elsewhere on the internet? Facebook - http://www.facebook.com/YouTubeCrashCourse Twitter - http://www.twitter.com/TheCrashCourse Tumblr - http://thecrashcourse.tumblr.com Support Crash Course on Patreon: http://patreon.com/crashcourse CC Kids: http://www.youtube.com/crashcoursekids
Views: 981121 CrashCourse
#72, Foreign exchange rate (Class 12 macroeconomics)
Class 12 macroeconomics ..... Foreign exchange rate.... Foreign exchange.... Types of foreign exchange rate ..... Depreciation and appreciation of currency.... Contact for my book 7690041256 Economics on your tips video 72 Our books are now available on Amazon Special Combo - Economics on your tips Micro + Macro http://amzn.in/d/eSxj5Ui Economics on your tips Macroeconomics http://amzn.in/d/2AMX85O Economics on your tips Microeconomics http://amzn.in/d/cZykZVK Official series of playlists UG courses ( bcom, bba, bca, ba, honours) – https://www.youtube.com/playlist?list=PLgC10_Xv-BGirAqOr-hU8e-N_Nz0UpgJ- Micro economics complete course – https://www.youtube.com/playlist?list=PLgC10_Xv-BGg5n3YU6oEV7_HIzBuEbbOz Macro economics complete course- https://www.youtube.com/playlist?list=PLgC10_Xv-BGg2ORORpILqiDR1gyH3MkXw Statistics complete course- https://www.youtube.com/playlist?list=PLgC10_Xv-BGjrAkDyeMioJ7DEexAEeVdt National income – https://www.youtube.com/playlist?list=PLgC10_Xv-BGjpE-1V4uz_0wvvbZQnSsj_ In order to promote us and help us grow Paytm on - 7690041256
Views: 389137 Economics on your tips
Exchange rate 04:  Impact on imports and exports .flv
Impact of a change in the Rand/dollar exchange rate on imports and exports
Views: 22452 lostmy1
Fin225 Chapter 10 Measuring Exposure to Exchange Rate Fluctuations with Mind Map Dr George Mochocki
Transaction Exposure Exposure of an MNC’s Portfolio Economic Exposure Translation Exposure
Views: 786 DrMochocki
Foreign Exchange Fluctuation, Foreign Exchange fluctuation entries in tally
Foreign Exchange fluctuation gain entry, Foreign Exchange fluctuation loss entry, Foreign Exchange fluctuation gain or loss entry, foreign exchange fluctuation calculation, Tally material, Tally classes, journal entries in tally, income entry in tally, payment entry in tally, how to post foreign transactions in tally, how to calculate foreign exchange fluctuation entries in tally erp9, tally erp9 entries. Purchase and sales entries, exchange rate
Views: 5910 Wisdom Tally
Impact of exchange rate fluctuation on indian garment industry
Dissertation project pearl academy
Views: 32 mayur bansal
Types of foreign exchange exposure
Foreign exchange exposure is classified into three types viz. Transaction, Translation and Economic Exposure. To learn more click on the below link https://efinancemanagement.com/international-financial-management/types-of-foreign-exchange-currency-exposure
Views: 14022 eFinanceManagement
Exchange rate fluctuations affect small businesses
Entrepeneurship in the country faces bleak prospects in the wake on the headwinds facing the economy. Smaller business are more vulnerable than larger players to exchange rate fluctuations and economic downturns. Let's go back to Gunther Deutsch at the JSE. He's speaking to Mercantile Bank economist, Trudi Makhaya For more News visit: http://www.sabc.co.za/news Follow us on Twitter: https://twitter.com/SABCNewsOnline?lang=en Like us on Facebook: https://www.facebook.com/SABCNewsOnline
Views: 273 SABC Digital News
Exchange Rate Fluctuation
Dr. Rakesh Mohan Joshi gives his views on Exchange Rate Fluctuation
The fluctuations of currency exchange rates and its Impact on doing business in Ghana
A participant sharing her views on the cedi fluctuation and the frustration of doing business in Ghana.
Views: 148 GGA - West Africa
AS11 - The Effects of Changes in Foreign Exchange Rates
CA Inter & CA Final - Accounting Standard on Foreign Exchange. How to Account for foreign exchange transactions as per AS 11? CA Inter Accounting CA Final Financial Reporting AS11 For full course please visit https://www.IndigoLearn.com For all videos please visit https://www.indigolearn.com
Views: 16577 IndigoLearn
Handling Exchange Rates and Currency Fluctuations with Paul Brewbaker
Host David Day speaks with economist Dr. Paul Brewbaker (Bank of Hawaii) about the potential impact of currency and exchange rates on Hawaii's housing market, real estate sales, foreign investors, and overall economy.
Views: 491 ThinkTech Hawaii
How to Invest in Foreign Currencies
Watch more How to Invest Your Money videos: http://www.howcast.com/videos/234001-How-to-Invest-in-Foreign-Currencies As with any investment, putting your money in foreign markets requires due diligence and the willingness to take risks. Step 1: Know the risks Know the risks. Trading in foreign currencies can be very profitable if you stay on top of the global economic market. But if you don't have the time or desire to do that, it also can be very risky. Step 2: Do your homework Do your homework. Research the financial strength of various nations so you'll have an informed opinion as to whether their currency will strengthen or weaken. Step 3: Open an account You can invest in foreign currency using a brokerage account, if you have one. If you have a PayPal account, hold funds in multiple currencies at no charge. Or find a bank that allows customers to keep foreign currency accounts. Tip Some banks offer FDIC-insured foreign currency accounts; this protects you up to a preset amount if a foreign bank goes bust, but doesn't cover losses caused by currency fluctuations. Step 4: Try a single play Consider buying a Certificate of Deposit in a foreign market with a better interest rate; then "sell it forward" -- you agree to sell the same amount of currency at a specific price on a future date. Known as a "single play," this protects you if the currency deflates during the duration of your CD. Step 5: Consider a double play Open a CD and gamble on a "double play," also known as an "open" or "naked" trade. If the foreign currency rises, you'll benefit both from the interest rate and the foreign currency being stronger than your own when you cash in. Just beware that you're also assuming the risk that the currency might deflate, which could wipe out the interest you made at cash-in time. Step 6: Wheel and deal Set up an online account on one of the Forex -- short for Foreign Exchange -- trading web sites. You'll be able to buy and sell foreign currencies anytime from Sunday at 5 p.m. eastern time to Friday at 5 p.m. eastern time, allowing you to cash in quickly on events that are likely to cause currency fluctuations. Did You Know? More than $1 trillion is traded in the global currency market every day.
Views: 41746 Howcast
Impact of inflation on exchange rates
The video explains why and how a currency depreciates when inflation in the country rises
Views: 97 Nadeem Zaidi
The National Bank will not allow sharp fluctuations of the exchange rate this year
Watch in the program: 1. The National Bank will not allow sharp fluctuations of the exchange rate this year as announced today during the meeting on the socio-economic development of the country under the chairmanship of President Nursultan Nazarbayev, in Akorda; 2. A Unified Coordinating Centre for the management of the Special Economic Zones will be opened in Kazakhstan, as reported in the Majilis at the presentation of the bill to improve the special economic zones; 3. Former polygon in Semey may be transformed into a radioactive waste repository of a future nuclear power station, the Vice-Minister of Energy Bahytzhan Zhaksaliyev announced at the presentation of the bill "On the Use of Atomic Energy"; 4. A tragedy struck the nation past week as the AN-2 plane crashed in the Zhambyl region; 5. A criminal case was initiated upon the mass traffic accident that involved a city bus; 6. Citizens of Uzbekistan will have to travel to Kazakhstan with a new set of documents; 7. A voluntary disarmament campaign has been launched in Kazakhstan since the beginning of the New Year; 8. Supreme Mufti of Kazakhstan and the Metropolitan have agreed to work together in the fight against extremism and sectarianism; 9. The European countries showed particular interest in the Kazakh model of interethnic relations. ‘Veterans live with us’ was the name of the campaign held in Kyzylorda as part of the Year of People's Assembly of Kazakhstan; 10. The WWII Victory Pennant has been delivered to Astana, thus completing the patriotic campaign-marathon devoted to upcoming 70th anniversary of Victory; 11. Pilot lessons on the basics of entrepreneurship for high school students started in schools in Kyzylorda; 12. An ethnic village is planned to be built near Astana; 13. Archaeologists in Almaty finished the season successfully. For this time, they found a burial dating back to 4-5 centuries BC on the outskirts of the city.
Views: 87 Kazakh TV
Exchange Rate System in India and its Types - Indian Economy for Prelims 2018
You can join my Live classes on Economy here: https://goo.gl/urfp1H In this lesson, Ayussh explains the exchange rate system and its types. This is an important concept to understand under Indian Economy for UPSC 2018 preparation. An exchange rate regime is the way an authority manages its currency in relation to other currencies and the foreign exchange market. Between the two limits of fixed and freely floating exchange regimes, there can be several other types of regimes. In their operational objective, it is closely related to the monetary policy of the country with both depending on common factors of influence and impact. The exchange system in India has a big impact on world trade and financial flows. The volume of such transactions and the speed at which they are growing makes the exchange rate regime a central piece of Indian Economy. Download the Unacademy Learning App here: Android: https://goo.gl/02OhYI iOS: https://goo.gl/efbytP Download the Unacademy Educator App here: Android: https://goo.gl/H4LGHE iOS: https://goo.gl/1FkFHp Do Subscribe and be a part of the community for more such lessons here: https://goo.gl/gycFVs
Views: 13194 Unacademy
How rupee-dollar rates are determined? Hindi Video
In this short animation video, we have explained that how currency exchange rate of Indian Rupees is determined with other foreign currencies? To watch more amazing video of general knowledge in Hindi visit our website http://netpill.in -~-~~-~~~-~~-~- Watch our new video "Historical story of Padmavati :: Conflict of two Emperors" https://www.youtube.com/watch?v=23G5Hb9lyZ8 -~-~~-~~~-~~-~-
Views: 452254 Netpill
AS 11 - "Accounting for Changes in Foreign Exchange Rates"
CA Final - Old Syllabus Students You can download my notes from my facebook about page - CA Final - OLD Syllabus Links Accounting Standards Material https://www.dropbox.com/s/xdf0c7n1zcjw4oo/Accounting%20Standards%20Full%20INCLUSING%20ANSWERS.pdf?dl=0 Financial Reporting Material https://www.dropbox.com/s/szcfu5xpla5mty4/CA%20Final%20Old%20Syllabus.pdf?dl=0 Changes in Financial Reporting https://www.dropbox.com/s/2nzjbfknqkh1gbk/Changes%20in%20FR.pdf?dl=0 Comparisons between IND AS vs AS https://www.dropbox.com/s/gh3qh9pjxe9zdw2/IND%20AS%20vs%20AS%20Comparison.pdf?dl=0 Watch all the videos free of cost on my Youtube Channel Follow the Link - https://www.youtube.com/knvsantoshmehra CA Santosh Mehra is a Diploma in IFRS from ACCA – UK subsequent to which he attained CERTIFICATION IN IND-AS / IFRS by ICAI in 2015. He is known for his skill in implementation of IFRS and IND AS with various enterprises in India and outside India. He is a certified trainer by ICAI for qualified CAs in various centres of ICAI. https://www.facebook.com/casantoshmehra/
Views: 36690 Santosh Mehra
Exchange Rates and Trade
With Trump's trade deal negotiations in process, and other big things occurring in the political and economic spectrum I think its a good idea to understand how currency affects the way different countries do business. Exports/Imports demand change and so does the environment around trade. Enjoy! Questions Comments Below! Instagram: https://www.instagram.com/elevate_investments/ Email: [email protected]
Views: 229 Elevate Investments
Korean exporters less prone to effects of exchange rate fluctuations: report 

Korean companies are less prone to the effects of foreign exchange rate fluctuations than before. A report by the Korea Institute for Industrial Economics and Trade says that Korean companies saw their operating profit drop by 0-point-0-5 percentage points in the period from 2000 and 2011 after a 1-percent fluctuation in exchange rates. But in the five years from 2006 to 2011, companies saw their profits drop by 0-point-0-3 percentage points with the same exchange rate fluctuation. The report says the improvement is partly because companies have a broadened mix of export items that are less sensitive to exchange rate fluctuations.
IAS 21 The Effects of Changes in Foreign Exchange Rates
http://www.ifrsbox.com This is the short summary of IAS 21 The Effects of Changes in Foreign Exchange Rates. In today's world, the entities carry out their foreign activities in 2 ways: 1. They have some transactions in foreign currencies, or 2. They Have a foreign operation. An entity can also decide to present its financial statements in some foreign currency other than their own. The objective of IAS 21 is to prescribe • How to include foreign currency transactions and foreign operations in the financial statements of an entity; and • How to translate financial statements into a presentation currency. Functional currency is the currency of the primary economic environment in which the entity operates. It is the own entity's currency and all other currencies are "foreign currencies". The primary economic environment is normally the one in which the entity primarily generates and expends the cash, but more factors needed to be considered, such as the currency in which the sales prices are denominated, etc. Presentation currency is the currency in which the financial statements are presented. How to report transactions in FUNCTIONAL CURRENCY Initially, all foreign currency transactions shall be translated to functional currency by applying the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. Subsequently, at the end of each reporting period, you should translate: • All monetary items in foreign currency using the closing rate; • All non-monetary items measured in terms of historical cost using the exchange rate at the date of transaction (historical rate); • All non-monetary items measured at fair value using the exchange rate at the date when the fair value was measured. All exchange rate differences shall be recognized in profit or loss with some exceptions. How to translate financial statements into a PRESENTATION CURRENCY When an entity's functional currency is NOT the currency of a hyperinflationary economy, then an entity should translate: • All assets and liabilities for each statement of financial position presented (including comparatives) using the closing rate at the date of that statement of financial position. • All income and expenses and other comprehensive income items (including comparatives) using the exchange rates at the date of transactions. All resulting exchange differences shall be recognized in other comprehensive income as a separate component of equity. For more information and other IFRS materials, please visit http://www.ifrsbox.com
Views: 67804 Silvia M. (of IFRSbox)
TYBCOM - Economics - RBI's Intervention and Foreign Exchange Rate Management - Demo
This concept is a introductory analysis of how does india's central bank the RBI plays an important intervening role from time to time to stabilise the structural fluctuations that occur in the system due to the foreign exchange fluctuations
Views: 593 Graduate Guru
Complete chapter of Foreign Exchange Arithmetic [in Hindi]
Hello friends, in this video you will learn CAIIB AND JAIIB AND concepts of foreign exchange in Accounting and finance for bankers: What is Foreign exchange? What is direct and indirect quote? What is Forex? Foreign exchange rate and its types Exchange rate arithmetic. Value date concepts Cash/ready, TOM, SPOT, Forward rate, Premium and Discount Forward points Arbitrage How to calculate forward points? Method of quoting forward rates.
Views: 65931 GrowYourself
“How do currency fluctuations affect investments?”
Changes in the value of currencies affects economies and companies around the world. To learn more including how currency fluctuations affect investments, see https://moisandfitzgerald.com/how-do-currency-fluctuations-affect-investments/
How Currency Fluctuation Affects Businesses Importing from Europe
Watch Chris Jacka, CEO of Crisp, explain what impact currency fluctuation had on his business that relies on 500 suppliers. Crisp is a branding and promotional items distributor. For more information about URICA, please visit https://urica.com and http://www.crispbranding.co.uk
Views: 115 URICA Limited
Exchange Rate Fluctuation & New Government
Why we see Exchange Rate Shift when new Government take control?
Views: 1 Consulting 360
A level Business Revision - Exchange Rates
An A level Business revision video focusing on the impact that fluctuating exchange rates have on the strategies pursued by businesses. Taking The Biz is a channel dedicated to A level Business revision. See more of our videos: http://www.youtube.com/c/TakingTheBiz Stay in touch with TakingTheBiz via social media: Facebook: https://www.facebook.com/TakingTheBiz/ Twitter: https://twitter.com/TakingTheBiz Instagram: https://www.instagram.com/takingthebiz/
Views: 6650 TakingTheBiz
What is CRAWLING PEG? What does CRAWLING PEG mean? CRAWLING PEG meaning & explanation
What is CRAWLING PEG? What does CRAWLING PEG mean? CRAWLING PEG meaning - CRAWLING PEG definition - CRAWLING PEG explanation. SUBSCRIBE to our Google Earth flights channel - http://www.youtube.com/channel/UC6UuCPh7GrXznZi0Hz2YQnQ?sub_confirmation=1 Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. Crawling peg is an exchange rate regime that allows depreciation or appreciation to happen gradually. It is usually seen as a part of a fixed exchange rate regime. The system is a method to fully use the key under the fixed exchange regimes as well as the flexibility under the floating exchange rate regime. The system is shaped to peg at a certain value but at the same time is designed to “glide” to respond to external market uncertainties. To react to external pressure (such as interest rate differentials or changes in foreign-exchange reserves) to appreciate or depreciate the exchange rate, the system can have moderately-sized, frequent exchange rate changes to ensure that the economic dislocation is minimized. Some central banks use a formula that triggers a change when certain conditions are met, while others prefer not to use a preset formula and frequently change the exchange rate to discourage speculations. The main advantages of a crawling peg are that it avoids economic instability as a result of infrequent and discrete adjustments (fixed exchange rate) and it minimizes the rate of uncertainty and volatility since the fluctuation in the exchange rate is kept minimal (floating exchange regime). For example, Mexico used a crawling peg to address inflation in the peso crisis. It transitioned from a fixed exchange rate in the 1990s without the instability of rapid devaluation. In practice, the system may not be an "ideal system" under certain scenarios. For instance, if there is substantial currency flows that may affect the exchange rate, monetary authorities may be "forced" to accelerate currency realignment, leading to substantial unsystematic costs to market players. In practice, only a few countries have adopted crawling pegs. E. Ray Canterbery proposes an idea of a delayed peg to eliminate many disadvantages of the crawling peg model. The delayed peg uses a wide band for exchange-rate fluctuations, while the band is allowed to move when foreign exchange liabilities accumulate (at a secret but predetermined rate). In China a new use of a "floating band" is essentially a delayed peg.
Views: 680 The Audiopedia
What is Currency Hedging?
Welcome to the Investors Trading Academy talking glossary of financial terms and events. Our word of the day is “Currency Hedging” In simple terms, currency hedging is the act of entering into a financial contract in order to protect against unexpected, expected or anticipated changes in currency exchange rates. Hedging can be likened to an insurance policy that limits the impact of foreign exchange risk. Hedging is often achieved through the use of derivatives such as options or futures. Hedging is a way for a company to minimize or eliminate foreign exchange risk. Two common hedges are forward contracts and options. A forward contract will lock in an exchange rate today at which the currency transaction will occur at the future date. Essentially, there are two options available to an investor: 1) be exposed to currency fluctuations ; or 2) be currency hedged. The objective of currency hedging is to reduce or eliminate the effects of foreign exchange movements over the life of the investment, such that a Canadian investor receives a return solely based on the change in value of the underlying assets, without the effect of changes in currency values. By Barry Norman, Investors Trading Academy - ITA