Questions tagged [foreign-exchange]
The foreign-exchange tag has no usage guidance.
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18 views
The Crisis of Argentina
newbie here.
Q1 - What needs to be done by the Argentinian government for their currency to regain back its strength?
Q2 - Why has the Argentine Peso depreciated against the U.S Dollar for more than ...
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0answers
16 views
Exposure of two companies in a transaction involving an FX option
An American company $A$ has sold a manufactured product to a German company $B$, and they agree for the payment of 100,000 EUR in 1 year.
What type of exposure does $B$ have?
What type of exposure ...
2
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2answers
156 views
Can't a country grow its GDP without foreign investment?
Whenever various developing countries around the world talk about growing their economies, they talk about facilitating foreign investments and they put so much emphasis on it as if a country's ...
3
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1answer
38 views
How does imposing 100 percent cash margin requirement on imports help to stabilize foreign exchange reserves of a country?
My country is facing a critical depreciation of its currency's exchange rate and the central bank has introduced a 100 percent cash margin requirement on a selected set of imports.
My main problem is ...
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0answers
64 views
How would a “one-way” fixed exchange rate backed by destroying foreign currency work?
Note: This question may seem really pointless, but it's actually in the context of a cryptocurrency idea I am developing, but I posed it this way as the question is not really about cryptocurrencies ...
5
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1answer
48 views
Is it true that the U.S has to run a chronic trade deficit with the rest of the world as a price to pay for being the world's reserve currency?
I have heard of the argument that in order for USD to be reserve currecy, the rest of the world must own enough USD to store it as reserves. In order for the rest of the world to own enough USD, U.S ...
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2answers
37 views
How does domestic demand affect the domestic currency's value
If an economy grows, due to a tax reduction for example, how does that affect the exchange rate?
My logic would be that reduced taxes put more money into people's pockets, which they then use to buy ...
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0answers
28 views
What is the composition of official reserve account?
What is the composition of official reserve account? Is it just composed of mere foreign currencies which don’t earn any interest or it is made up of foreign bonds, securities and gold as well? If ...
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0answers
30 views
Mechanics of Sterilized Intervention?
I'm looking to see if someone can help improve my understanding of sterilized intervention in FX markets.
My intuition/understanding is:
Assume that the domestic currency is depreciating, perhaps ...
3
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2answers
367 views
Abolishing all tariffs without reciprocity
Is a policy of abolishing tariffs without expecting other countries do so a sustainable economic policy? What are the arguments for or against it?
Fear of imports is very common among people. Money ...
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0answers
8 views
Has the Chilean central bank intervened in the foreign exchange markets since 2001?
I know that the Chilean central bank intervened in 2001 twice. Has it ever intervened since then? Is the Chilean Peso a completely free float currency?
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3answers
115 views
Theoretical market capitalisation of a crypto currency?
Here’s the context. I want to know what the theoretical market capitalisation (say eg $US / Bitcoin times Q the number of coins - it doesn’t have to be Bitcoin) of a crypto currency? Assume that the ...
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2answers
2k views
Who determines the exchange rate and how?
I have almost no knowledge about economics. However, a question always comes in my mind. How exchange rate really differ? I live in Bangladesh. So how, why, who changing BDT and US Dollar exchange ...
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2answers
172 views
How does Russia have so much foreign exchange reserves?
Source
Russia is under U.S. sanctions. How does Russia have so much foreign exchange reserves?
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0answers
65 views
Foreign revenue streams as proxy for foreign investment
I have access to a very detailed dataset on the revenue streams of a large number of firms and their country of origin (in percentage of total revenue).
Using other data, the international country ...
1
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1answer
72 views
Econometrics for currency valuation?
Different assets have different motivations and components for price determination. For example, an equity stock price might be considered to be include the value of underlying company, its potential ...
4
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1answer
80 views
Why imports increase if higher relative inflation?
I'm reviewing a previous AP Macroeconomics exam and I saw the following question:
The United States and South Korea are trading partners, and the United
States has a zero current account balance. ...
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1answer
189 views
What are the limitations that a country faces in increasing its Forex Reserve?
The Forex Reserve of a country remains in the locker of its central bank and does not earn any interest for that country. What are the measures that the central bank of a country can take to overcome ...
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1answer
567 views
Exchange rate and domestic money supply
It seems an obvious fact (not explained by authors but stated) that when a Central Bank purchases foreign currency (to stabilise its own), the domestic money supply goes up.
It seems to me that the ...
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0answers
43 views
Relationship between Fixed exchange rate and balance of trades
I wanna find a relationship between the fixed moroccan exchange rate and balance of trade and some other variables like international reserves , what type of regression should i use ?
thanks in ...
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2answers
250 views
How is the rest of the world making the US an interest free loan by holding US currency?
In the book "Macroeconomics" by Olivier Blanchard & David R. Johnson, the following appears:
In yet other countries, people who have emigrated to the United
States bring home U.S. dollar ...
2
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2answers
74 views
PPP / currency evaluation
An economics book has the following example:
In the USA, a Big Mac sells for 1 USD, while in Germany it sells for 3 EUR.
The "fair" FX relation would therefore be 1 USD = 3 EUR. At the FX market, ...
2
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1answer
454 views
Misleading vertical axis in foreign exchange graphs analyses?
The market for a currency typically has the y axis labelled as (currency1/currency2) where currency1 is the currency in which the demand and supply is for. If this is the case, wouldn't it mean that a ...
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2answers
60 views
Why would increased inflation increase the value of the dollar and bond yields?
I was reading this Fortune article (http://fortune.com/2016/11/14/donald-trump-victory-dollar-inflation/) and came across this confusing quote:
"'Clearly the market has settled on a 'buy dollar' ...
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0answers
72 views
Do changes in the interest rates affect the supply of currency?
I understand how changes in interest rates affect the demand for currency (i.e. foreign exchange), but was wondering whether there is also an effect on its supply. I am hypothesising the following: ...
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1answer
43 views
What physically happens when foreign currency reserves change?
Assume that the United States decided to hold more yuan in the federal reserve. Which processes does that involve? I assume there is some sort of electronic exchange between the two central banks ...
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0answers
73 views
Evaluating the return of a trading strategy on forex markets
Which measure should I use to evaluate the returns generated with a trading strategy based on announcements of macro-economic news on forex markets.
I thought about the Sharpe-ratio, however I do not ...
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1answer
500 views
How should I adjust data for both inflation and foreign exchange rate?
I’m not sure if this is typically done, but suppose my data point is in 2013 JPY and I want to express in 2016 USD. Do I apply CPI to express data in 2016 JPY, and then apply exchange rate to 2016 USD?...
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0answers
37 views
Reasons and mechanisms of Deutsch Mark revaluation in 1968
In November 1968, large inflows of foreign currency into the Bundesbank prompted Germany to enact a "pseudo - revaluation" with a special tax on exports and tax allowance on imports.
Source: German ...
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0answers
39 views
What's the equation of currency fluctuation?
Preamble:
Today the rate of EUR is 82.09 in BDT ( Bangladeshi Currency) and two hours later it's 82.50 ( I hope, it's increasing). But why does this fluctuation just keeps happening? Looks like the ...
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0answers
65 views
How does foreign exchange settlement work?
How does the settlement of trades in foreign exchange work?
For example, if I am a large company with money in dollars and I buy another currency like Deutschmarks with my dollars, how does the money ...
4
votes
1answer
115 views
How does Egypt prevent people from arbitraging their currency?
Apparently Egypt uses a fixed exchange rate so there is a substantial difference between the government rate for the Egyptian pound and the price on the street. What prevents someone from just buying ...
