Questions tagged [foreign-exchange]

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2answers
80 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
1k 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
92 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
94 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: ...
1
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1answer
75 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
89 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 ...
1
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1answer
997 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?...
2
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0answers
52 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
59 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
75 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
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1answer
347 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 ...
0
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1answer
109 views

Currency triplets - arbitrage opportunity?

I have three currency pairs - USDEUR - 0.88, USDINR - 67.13 and EURINR - 75.88 , so simple math tells me that EURINR should be USDINR/USDEUR = 76.28 ...this is a fairly significant deviation from an ...
2
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3answers
179 views

Russian ruble drop in value due to low oil prices

http://www.americanactionforum.org/research/impact-falling-oil-prices-russian-financing/ Based on the above article, the author states that "For budgeting, this favors the oil exporter, because a ...
5
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2answers
191 views

How does the russian interest rate raise will defends the Ruble from devaluation?

This strategy (interest raise to minimize currency devaluation) is being adopted in countries like Brazil and Russia: Brazil interest rate http://www.tradingeconomics.com/brazil/interest-rate Russia ...

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