Questions tagged [foreign-exchange]
The foreign-exchange tag has no usage guidance.
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During the Covid Pandemic why did the EURO appreciate against the USD even though during recessions the USD is supposed to rise as a safe-haven?
During recessions everyone flocks to USD as a safe-haven currency. However, during the pandemic quite the opposite happened in terms of EUR/USD and the Euro appreciated against the USD all the way ...
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How is the PBOC exchange reference rate set in China?
For instance, say the PBOC decides that they will set the rate at $1=7CNY. Is it just an announcement by the PBOC whereby now all Chinese banks/financial institutions have to follow this fixed ...
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difference between "crawling like arrangement" and "stabilized arrangement"
What is the difference between "crawling like arrangement" and "stabilized arrangement" ?
what about margins ? both less than + or -1% ?
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Why people buy foreign bonds when foreign interest rate raises?
I'm reading Investopedia's How National Interest Rates Affect Currency Values and Exchange Rates to understand how interest rates affect exchange rates.
It says:
Generally, higher interest rates ...
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Could Foreign Exchange rates fluctuate under a Gold Standard system?
I recently read an article where it said that during the gold standard, right before world war 1, 1 GBP went from equaling \$4.87 to soaring up to \$6.75 . My understanding always was that Forex rates ...
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BOP balancing to 0, use of capital and financial account
Please someone for the love of god help me. I can't find two sources on the internet that don't have conflicting or very difficult to understand information on the balance of payments.
I have various ...
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How does a country with lesser exports than imports get the foreign exchange to fund the excess?
Let's take a developing country.
Assume it's exports, tourism revenue, repatriation by workers working abroad all totally contribute 100$ of forex for the country per year.
And it's imports are 110$.
...
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Large quantity sale of CNY at current currency value
Some company wants to sell large quantity of CNY and buy USD on Forex. Let current currency value is 1 CNY = 0.14 USD at the time moment on Forex. When company sell large quantity of CNY, money supply ...
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Which foreign currency has had the least amount of inflation over the last 50 years?
I found this table that lists currency exchange rates relative to the US dollar. https://fx.sauder.ubc.ca/etc/USDpages.pdf
I noticed some currencies have increased in value relative to the dollar and ...
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How did empires make wealth out of empire-colony trade?
It is commonly discussed that one way the empires of 16-18th would receive wealth from colonies is:
Get raw materials from a colony
Transport them to the empire
Make more sophisticated products out ...
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How would one arbitrage a mispricing in interest rates and forex rates?
If you have a Japanese bond with a return of 2%, and an American bond paying 5%, but both current and forward exchange rates are 100 yen to 1 usd, how would one take advantage of this opportunity to ...
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Back-testing for FX VaR model
Suppose that a company for modeling market risk arising from Foreign Exchange positions in its portfolio decides to use the VaR model to compute the minimal amount of capital to hold. Assume that the ...
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How do Foreign Investments by Central Banks increase the Money Supply of an Economy?
Trying to understand if "money supply" and "currency in circulation" apply only to the money within the borders of the country or does it also include its money in foreign nations ...
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When the country's currency is falling, does it make sense for Central Bank to intervene beyond curbing Volatity?
Consider a country who have more imports than exports. If the country's currency is falling badly with reference to the dollar (and the dollar is the main trading currency for the said country), then ...
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Why Developing countries, especially exporters are most vulnerable to strong US Dollar?
Developing countries, especially exporters such as Argentina and
Turkey, are among the most vulnerable, says Harvard economics
professor Jeffrey Frankel.
Excerpt from: https://www.bloomberg.com/news/...
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Foreign Currency Reserves: Profit / Loss from Foreign Currency Depreciation / Appreciation?
From Wikipedia article on foreign exchange reserves:
The central bank may, however, profit from a depreciation of the foreign currency or incur a loss on its appreciation.
Why does the depreciation ...
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Why does the dollar seem weak?
2:00 (GMT+8) - The FED raised interest rates at 0.75-percentage-point (75 basis points I believe, not sure with terminology but definitely now at 1.75%). But even so, why does the USD seem weaker? I ...
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Inflation or CPI times CURRENCY/DOLLAR rate?
Is there a database which follows the inflation or cpi MULTIPLIED by the forex rate. In order to calculate the change in cost of living around the world relative to ONE, NORMALISED base currency, ...
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Why did the Iranian Rial peak suddenly on 1 August 2014?
Search Iranian Rial and click on Max above the chart.
Iranian Rial to Pound Sterling:
Why did the Iranian Rial peak suddenly on August 1st 2014?
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How does US inflation impact dollarized nations?
For instance, would a high inflation rate on the US have any impact on countries that use the US dollar as their only legal tender, eg Ecuador or El Salvador?
I often hear that high US inflation will ...
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Why doesn't Russia buy USD to pay its external debt and avoid default?
(I apologize beforehand for this extremely clueless question! I have searched for the answer for a long time without success.)
Credit rating agencies have recently declared Russia to be close to ...
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Will business optimism in Ghana appreciate / depreciates Ghana's currency?
Text from the image:
One of Ghana’s top trading partners is India. The currency in Ghana is the cedi and the currency in India is the rupee.
Which of the following is a likely consequence of an ...
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What caused Russia's currency to appreciate back to pre-war levels despite sanctions and debt default? [duplicate]
Prior to its invasion of Ukraine on 24 Feb 2022, Russia's currency was trading at around 0.012 USD.
Today, the Ruble is back near pre-war levels (currently 0.12 USD):
I thought war, sanctions, ...
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(How) does Russia benefit if Gazprombank instead of Gazprom gets to keep the euros?
I know there's an older question here, but Russia has recently clarified (after some pushback from the EU capitals) what it means by gas payments in rubles. As RT explained:
“Everything will be fast, ...
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How do USD sanctions on Russia work?
On the 28th of February 2022, the US Government banned United States persons from engaging in transactions with the Central Bank of the Russian Federation. The motive was quoted as "to prohibit ...
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How does falling dollar make goods cheaper for foreigners?
If the exchange rate between the dollar and euro is 1 to 1. Then a 100 million dollar Boeing jet should cost around 100 million euros. If inflation in the US is 5% (0% in Europe), then the Boeing jet ...
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Is net foreign exchange reserve for a country more important?
Let's say a country need 8 billion dollars for reserve. It has 10 billion dollars of foreign exchange reserve, but also with 9 billion dollars of foreign debt or even more. So the remaining net ...
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Monetary sterilization’s working is wrong?
Say, there is an increase in demand for dollars (as compared to the other currency, say yen), which will put appreciation pressures on dollar.
Then to counter this appreciation, we need to buy yen. ...
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How are the rates between two currencies (fiat and cryptocurrecies) determined? [duplicate]
How are the exchange rate between two countries determined? For example how is exchange rate between the dollar and the euro established?
My guess is it has to do with some form of demand/supply but I ...
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What are the macroeconomic options available to China for resolving the Evergrande bubble?
Partly inspired by this Noah Smith article.
I was talking with a friend and we were trying to itemize what options might be available to the Chinese government to resolve the collapse of Evergrande.
...
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How do currency boards maintain a 100% foreign reserve backing in the presence of fractional reserve banking?
Under a currency board system, money in circulation has to be 100% backed by foreign reserves. Suppose the domestic currency (A\$) is 100% backed by a foreign currency (B\$), with a fixed 1:1 ratio. ...
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Can an appreciating currency lead to inflation?
If a currency, e.g. the rupee (INR), is appreciating against, say, the USD, it possibly means that there is a high demand for the former. India could have net exports, high remittances, increasing ...
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Is there a way to trade currencies several times and end up with more money than one starts with?
Conjecture: The foreign price value of a currency is not absolute.
Scenario:
If the euro appreciates relative to the British pound and the price of the US dollar stays the same relative to the euro, ...
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The impact of a devaluation of the national currency under a fixed exchange rate system
I would really be thankful if any of you could check my answer to the following question.
Question:
Describe, using the IS-LM-BP model, the impact of a devaluation of the national currency under a ...
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How does one country peg its currency to another's? [closed]
For example, Belize has pegged its currency to the US dollar at an exchange rate of 2 Belize dollars to 1 US dollar. How does Belize do that?
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Why is the supply curve in the foreign-currency exchange market vertical?
In the book 'Economics' by Mankiw and Taylor the demand and supply curves on the foreign-currency exchange market are shown as follows:
The supply equals the Net Capital Outflow (NCO). I would have ...
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Dynamics of interest rates, exchange rates and bond prices within the UIP
There are already a few questions about the workings of the UIP and the exchange rate. What I have basically taken from those discussions is that one always has to distinguish between the spot rate ...
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How does foreign trade work in a planned economy?
I know that in a planned economy all economic processes are ruled by the state and that there are disadvantages such as too much bureaucracy and that sometimes deals are not always met with demand... ...
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Is the forex market a form of bartering?
I had this showerthought that the forex market is pretty much currency bartering. The forex market seems to be different from commodity or stock markets in that you exchange one currency for another. ...
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Since the US-China Trade Deficit grew, would the USD be valued more now compared to the RMB?
I'm curious to see how broadening or narrowing a trade deficit would affect a currency pair.
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Size US Capital Account
I am not able to find the size of the capital account within the balance of payments for the US. Only "net" numbers, does anyone know the size of both sides of this account? They both seam to be ...
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Why does an increasing demand for dollars lead to the depreciation of a currency?
I am self studying some slides of a course on monetary economics.
The source of the slides is Pilbeam, chapter 11 on the mechanism of the Bretton Woods system.
I don't understand the following ...
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Why would oil suppliers choose a lower priced contract?
The West Texas Intermediate (WTI) futures contract has ranged from \$6 to \$20 in the last 48 hours. The May Shanghai International futures contract is 205 Yuan (CNY). At 7 CNY per USD, that comes ...
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How do you read currency exchange rates in terms of domestic and foreign currency?
I am having some issues understanding how to read exchange rates.
E is the exchange rate
I read online that if we have for example E\$/€, then the base currency in this case is the dollar and the ...
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Relationship between government expenditure and exchange rate?
I've read an increase in government expenditure can lead to increase the chances of currency crisis but shouldn't it lead to the opposite?
Fiscal deficit ----> Govt will undertake borrowings --->...
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Do local taxes help in paying back foreign debts?
I always wonder if increasing local taxes could help countries in paying off the foreign debts?
I think taxes generate income in local currency. While foreign debts (from IMF, World Bank etc.) are to ...
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Why is oil being traded in U.S. dollars?
I am trying to understand the concept of money,forex, depreciation of currency,devaluing,...(just the basic stuff). While I was reading about why oil is being traded in U.S. dollars, on the internet, ...
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How does exchange rate change with respect to interests?
If the central bank raises intereat rates, isn't the money supply now less and the exchange rate is greater? I have run into opposite statements and dont know how to approach this problem.
Thanks in ...
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What prevents a government from issuing debt to finance riskier investments?
Germany has a 10Y bond yield of -0.336%. Meanwhile, Brazil has a 10Y bond yield of 6.415%.
Why doesn't the German government issue bonds in order to buy Brazilian bonds? It seems a no-brainer win. ...
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Meaning of Exchange rate
Does exchange rate of local currency relative to US dollar mean LOC/USD or USD/LOC ?
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