Skip to main content

Questions tagged [foreign-exchange]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
4 votes
1 answer
52 views

How does China maintain the soft peg?

As a central bank, if you want to keep your currency low you can just keep buying foreign currencies (which is selling your own currency) to satisfy all the demand for your currency and prevent ...
Sea Erchin's user avatar
1 vote
0 answers
20 views

Balance of Payment vs. FX rate

How can a country with a Current Account deficit can have an exchange rate appreciating and viceversa a Current Account surplus and a currency depreciating?
FinanceStudent's user avatar
1 vote
0 answers
26 views

Current Account deficit but FX appreciating?

When the Current Account (CA) is in deficit it means there is less demand for a currency than supply so it should theoretically depreciate but sometimes this does not hold. When a country with CA ...
Finance_student's user avatar
0 votes
0 answers
16 views

How is wealth of a foreign investor proven, validated, audited?

Scenario: Crazy Rich Foreigner shows up in another country and wants to buy some very expensive goods/property. They purport to have massive wealth back home in their country's currency. They are ...
Nicholas Franceschina's user avatar
0 votes
1 answer
65 views

How often (if ever) do currency exchange cross rates differ from actual rates?

Do major currencies' cross rates ever differ from their actual ('bilateral') exchange rates, and if so, how often does it happen in practice? I guess it would never happen (beyond, say, the fourth ...
stevec's user avatar
  • 671
1 vote
0 answers
19 views

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 ...
Man Dem's user avatar
  • 43
0 votes
0 answers
21 views

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 ...
Man Dem's user avatar
  • 43
0 votes
0 answers
52 views

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% ?
Leila Zniber's user avatar
0 votes
1 answer
74 views

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 ...
robertspierre's user avatar
1 vote
1 answer
49 views

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 ...
Man Dem's user avatar
  • 43
1 vote
1 answer
115 views

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 ...
Daniel Rübenacker's user avatar
0 votes
0 answers
46 views

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$. ...
user93353's user avatar
0 votes
1 answer
74 views

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 ...
Mike_bb's user avatar
  • 141
1 vote
1 answer
76 views

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 ...
tstew's user avatar
  • 111
1 vote
2 answers
142 views

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 ...
Антон Бугаев's user avatar
0 votes
1 answer
44 views

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 ...
user43188's user avatar
1 vote
1 answer
63 views

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 ...
Man Dem's user avatar
  • 43
2 votes
0 answers
45 views

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 ...
user93353's user avatar
0 votes
0 answers
28 views

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/...
q126y's user avatar
  • 133
1 vote
1 answer
64 views

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 ...
Per48edjes's user avatar
0 votes
1 answer
70 views

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 ...
joshuaebs's user avatar
0 votes
0 answers
19 views

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, ...
gdcpb's user avatar
  • 101
0 votes
2 answers
28k views

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?
user41154's user avatar
1 vote
0 answers
31 views

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 ...
StatsScared's user avatar
1 vote
1 answer
78 views

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 ...
kjo's user avatar
  • 193
2 votes
1 answer
73 views

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 ...
MangoPizza's user avatar
4 votes
0 answers
52 views

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, ...
onufrit's user avatar
  • 41
2 votes
2 answers
191 views

(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, ...
against very long user names's user avatar
1 vote
3 answers
126 views

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 ...
HungryHeretic's user avatar
0 votes
1 answer
19 views

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 ...
Liam Coyne's user avatar
0 votes
1 answer
36 views

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 ...
dspjm's user avatar
  • 103
1 vote
1 answer
41 views

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. ...
Polime's user avatar
  • 71
1 vote
0 answers
19 views

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 ...
Finlay Weber's user avatar
1 vote
0 answers
43 views

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. ...
fox's user avatar
  • 161
1 vote
0 answers
56 views

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. ...
Flux's user avatar
  • 553
0 votes
2 answers
98 views

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 ...
Tomahawk's user avatar
0 votes
1 answer
44 views

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, ...
JeGoB24's user avatar
0 votes
1 answer
124 views

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 ...
Blg Khalil's user avatar
-2 votes
1 answer
98 views

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?
Bear Bile Farming is Torture's user avatar
0 votes
3 answers
1k views

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 ...
Jocka G's user avatar
0 votes
1 answer
40 views

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 ...
Luca's user avatar
  • 25
0 votes
1 answer
103 views

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... ...
Gregory's user avatar
  • 133
2 votes
1 answer
52 views

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. ...
Tea Tree's user avatar
0 votes
2 answers
28 views

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.
Sean Taylor's user avatar
0 votes
0 answers
29 views

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 ...
user123124's user avatar
1 vote
2 answers
329 views

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 ...
Nick Decroos's user avatar
1 vote
1 answer
33 views

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 ...
Ms Jackson's user avatar
0 votes
1 answer
880 views

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 ...
Sara Saletti's user avatar
0 votes
1 answer
77 views

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 --->...
Varun Singh's user avatar
0 votes
1 answer
33 views

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 ...
Khadim Ali's user avatar