Currency Wars( Reference)

In: Business and Management

Submitted By azureshen
Words 436
Pages 2
Currency Wars, Revisited
By THE EDITORIAL BOARD, NYT FEB. 7, 2014
In recent years developing countries like Brazil complained that the United States and other industrialized countries were waging a “currency war” against them by artificially driving down the value of dollars, euros and yen. Now officials in some nations, like Argentina and Turkey, are blaming foreign “vultures” and “the interest rate lobby” for the sharp depreciation of their currencies.
Policy makers fear any big and sudden changes in the value of their currencies. A rapid appreciation makes their country’s exports less competitive on the world market, while a fast depreciation raises the cost of imported commodities like oil and makes it harder for governments to repay loans they took out in dollars or euros.
So it should come as no surprise that officials are upset by the recent market movements. But their anger is misplaced. There is no foreign conspiracy against the Argentine peso, the Turkish lira or other currencies that have fallen against the dollar. The Federal Reserve’s recent decisions to slow its bond-buying program have strengthened the dollar. But most of these currencies have declined primarily because of domestic problems.
For example, the Argentina peso has been under pressure for months because misguided government policies caused inflation to surge to 28 percent last year. The peso has fallen nearly 22 percent against the dollar since the end of November. The Turkish lira has fallen about 9 percent in the same period because Turkey’s central bank has been too slow to raise interest rates despite an annual inflation rate of 7.4 percent. And investors have been unnerved by the autocratic style of Prime Minister Recep Tayyip Erdogan, who has tried to squash corruption investigations of senior officials.
What leaders of developing countries ought to be doing now is…...

Similar Documents

Currency

...Currency Depreciation – a concern for the Indian Economy The Indian Rupee has marked a significant depreciation against the US dollar marking a new risk for Indian Economy. Till the beginning of the current financial year very few had ever expected Rupee to depreciate to so low levels. On October 21, 2011, the rupee crossed Rs. 50/$ for the first time this year touching new lows of Rs.53.72/$ on 14th December 2011. What is even more interesting to note is that when other countries are trying to keep their currencies devalued, India is trying to prevent depreciation of its currency. As Indian currency has sharply depreciated not only against the US dollar, but also against the other currencies of the world, a myriad of factors can be associated with this devaluation of this currency. There are supposedly four factors behind the recent scenario: * Flight of foreign funds from the Indian market. * Slowdown in the capital inflows. * Higher global crude oil prices, which widens the current account deficit and also increase dollar buying by oil companies. * Recovery of US dollar. As the downbeat forces have played strong over the last few months, investor risk-appetite has contracted, thereby increasing the demand for safe haven such as US treasury, gold and the greenback. Secondly a prospective decline in inflows on the capital account of the balances of payments could further be associated with the depreciation in rupee. The most possible impact of the......

Words: 573 - Pages: 3

References

...University Library Guide to the Harvard Style of Referencing July 2008 http://libweb.anglia.ac.uk Anglia Ruskin University 1. GENERAL INTRODUCTION .................................................................................. 4 1.1 1.2 1.3 2. Explanation of citation and referencing .....................................................4 Plagiarism .................................................................................................4 Referencing systems.................................................................................5 CITING REFERENCES IN TEXT USING THE HARVARD SYSTEM..................... 6 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 3. Author’s name cited in the text ..................................................................6 Author’s name not cited directly in the text................................................6 More than one author cited in the text .......................................................6 More than one author not cited directly in the text ....................................7 Two authors for the same work .................................................................7 More than two authors for a work..............................................................7 No date .....................................................................................................8 Page numbers ...........................................................................

Words: 6910 - Pages: 28

Brasil Currency

...imports and also capital inflow into the country due to the high interest rates. Since the government wanted to make Brazil competitive for exports, a weak currency would dissuade companies from exporting since they would earn less in revenue for every $ exported. Further with a free currency and no capital controls, the ease of investing and removing capital would make the Brazilian stock market (which as it is, is very small) more susceptible to foreign capital. b. Medium term (1-2 years)? In the medium term, the movement in the real would dependent on several factors such as: global sentiments, status of the euro crisis, relative attractiveness of other market (such as Mexico, Africa, South East Asia) etc., However it would be ideal if the real was stable in the range of R$2 +/- 10% This would ensure stability in the economy and capital markets. A strong currency would encourage imports while a weak currency would discourage investments. Further a weak currency would also make the corporates in Brazil nervous as they will need to pay more reals for every $ of debt on their books. Would these be adverse developments for Brazil? Why? I think it is important to have stability in the currency before allowing it to float freely. Brasil is still an emerging economy and needs to have a scrupulous approach to its currency & monetary policy. It not only needs foreign capital for development but also needs to have a balanced current account. Further given the......

Words: 760 - Pages: 4

Critically Evaluate Post War Realist Explanation of International Politics with Reference to Power

...Year, History and Politics Essay Topic: “Critically Evaluate Post War Realist Explanation of International Politics with Particular Reference to Power” Introduction The tradition of political realism – realpolitik, power politics – has a long history that is typically traced back to the great Greek historian Thucydides in the fifth century BC. Although dominant attitudes towards realism have varied, realist arguments and orientations have been central to the Western theory and practice of international relations. “In particular, “modern” international society, whether dated from the era of Machiavelli at the turn of the sixteenth century or that of Hobbes in the mid-seventeenth century, has been closely linked to realist balance of power politics. The link between realism and international theory is especially strong in the twentieth century. International relations first emerged as an academic discipline before and immediately after World War I, largely in reaction against realist balance of power politics. The discipline was then reshaped immediately before and after World War II by self-identified realists such as E. H. Carr and Hans Morgenthau. Prominent scholar-practitioners, such as George Kennan and Henry Kissinger, have called themselves realists. For most of the post-World War II era realism has been the dominant paradigm in the Anglo-American study of international relations”. Even in our post-Cold War era of globalization, realist theories, although much less......

Words: 2497 - Pages: 10

Critically Evaluate Post War Realist Explanation of International Politics with Reference to Power

...Politics Essay Topic: “Critically Evaluate Post War Realist Explanation of International Politics with Particular Reference to Power” Introduction The tradition of political realism – realpolitik, power politics – has a long history that is typically traced back to the great Greek historian Thucydides in the fifth century BC. Although dominant attitudes towards realism have varied, realist arguments and orientations have been central to the Western theory and practice of international relations. “In particular, “modern” international society, whether dated from the era of Machiavelli at the turn of the sixteenth century or that of Hobbes in the mid-seventeenth century, has been closely linked to realist balance of power politics. The link between realism and international theory is especially strong in the twentieth century. International relations first emerged as an academic discipline before and immediately after World War I, largely in reaction against realist balance of power politics. The discipline was then reshaped immediately before and after World War II by self-identified realists such as E. H. Carr and Hans Morgenthau. Prominent scholar-practitioners, such as George Kennan and Henry Kissinger, have called themselves realists. For most of the post-World War II era realism has been the dominant paradigm in the Anglo-American study of international relations”[1]. Even in our post-Cold War era of globalization, realist theories,......

Words: 2505 - Pages: 11

Currency Option

...1. Managing Currency—Currency Options Let’s based on Figure 1.1 Option Chain for NASDAQ OMX call option below, we will do a call option example. Figure 1.1: Option Chain for NAZDA OMX Group Inc. (Taken and Compiled from Figure 1.2: Option Chain for NASDAQ OMX Group Inc. (NDAQ) in Appendix A) Both calls and puts option will be based on the option of striking price at 32 cent/AUD, expires on September 2013 and a contract size is AUD10,000. 1.1 Call Option Premium price=2 cents/AUD Supposed that the spot rate at expiration (in cents), ST = 40 cents/AUD Exercise value = ST– Strike price = 40 – 32 = 8 cents per contract or $800. Thus, the call owner will be able to purchase AUD10,000 worth $4,000 (=AUD10,000 X $0.40) in the spot market, for $3, 200 (=AUD10,000 X $0.32). But if the Spot rate at the expiration is lower than the strike price, and causing a negative exercise value, the caller buyer has no obligation to exercise as it will be a disadvantage. He/she can either let it expire or zero value. Below in Diagram 1.1 graph illustrates the 32 Sept AUD call option from the buyer’s perspective at the expiration. As shown above, in the buyer’s perspective, he/she should not lose any amount over the premium when the Spot rate is higher than the Strike price and in theory the buyer will have an infinite gains. When it reaches the spot rate at expiration which is ST = E+p = 32+2 = 34 cents/AUD, both the buyer and the writer have gain or lose...

Words: 580 - Pages: 3

Currencies

...Country Name | Currency Name | Code | Symbol | Afghanistan | Afghani | AFN | Af, Afs | Albania | Lek | ALL | Lek | Algeria | Algerian Dinar | DZD | DA | American Samoa | United States Dollar | USD | $ , ¢ | Andorra | Euro | EUR | € | Angola | Kwanza | AOA | Kz | Anguilla | East Caribbean Dollar | XCD | $ | Antigua and Barbuda | East Caribbean Dollar | XCD | $ | Argentina | Peso | ARS | $ | Armenia | Dram | AMD | | Aruba | Guilder | AWG | Afl. | Ashmore and Cartier Islands | Australian Dollar | AUD | A$ | Australia | Australian Dollar | AUD | A$ | Austria | Euro | EUR | € | Azerbaijan | Manat | AZN | m , man. | Azores | Euro | EUR | € | Bahamas | Bahamian Dollar | BSD | B$ | Bahrain | Bahraini Dinar | BHD | BD | Bajan (Barbados) | Barbadian Dollar | BBD | Bds$ | Balearic Islands | Euro | EUR | € | Bangladesh | Taka | BDT | | Belarus | Belarusian Ruble | BYR | Br | Belgium | Euro | EUR | € | Belize | Belize Dollar | BZD | BZ$ | Benin | West African CFA, Franc | CFA, XOF | CFA , c | Bermuda | Bermudian Dollar | BMD | BD$ | Bhutan | Bhutanese Ngultrum | BTN | Nu. , Ch. | Bhutan | India Rupee | INR | Rs. , p | Bolivia | Boliviano | BOB | Bs. | Bonaire | Netherlands Antilles Guilder | ANG | NAƒ, NAf, ƒ, or f | Bosnia and Herzegovina | Convertible Marka | BAM | KM | Botswana | Pula | BWP | P | Brazil | Real | BRL | R$ | British Indian Ocean Territory | United Kingdom Pound | GBP | £ , p | British Indian Ocean......

Words: 1628 - Pages: 7

War of Currency, Who Is the Winner?

...Subject: War of currency, who is the winner? During the last week, U.S. dollar kept its way of weakening against major currencies of the world. The exchange rate of Euro has achieved its 8 months’ record high against US dollar, the Australia dollar has reached its 27 years’ historical high and the Japanese yen has got its 15 years’ historical high ever since the “Plaza Accord” in the late 1980s. What’s more, only in September, the Chinese Yuan has been appreciating by 2% against US dollar, and this number is still growing. It is expected that the policy of weakening dollar may trigger a currency war among the major economic entities all around the world. Under this circumstance, lots of central banks have taken measures to prevent an over-appreciation of its own currency. Japan has lowered its inter-bank overnight call rate to nearly zero. And the government also approved a stimulus package of 5.05 trillion yen. Emerging market and export oriented countries like Brazil raised the taxes on fixed income securities from 2% to 4%. South Korea is now buying U.S. dollars to prevent its won going up too quickly. As far as we are concerned, there are mainly two reasons for the current war of currency all over the world. The primary reason is that the United States hasn’t demonstrated a very strong potential in its growth. The economic performance is way below its expectation. To stimulate the economy, Federal Reserve has released several monetary plans which are referred as...

Words: 664 - Pages: 3

American Currency

...History of American Currency * * When the early English settlers came to America they carried small amounts of capital to trade amongst themselves. There is an account of John Winthrop who was a leading figure in the founding of the Massachusetts Bay Colony, in 1630 writing to his son telling him to bring 150 or 200 pounds with him. Later early settlers brought money to exchange for seed, cattle, and any form of capital the original colonies had already accumulated. During this time a married clergyman was allowed 30 pounds per year. Josias Plainstowe, having stolen four baskets of corn from the Indians needed to repay eight and be fined five pounds. Carpenters, sawyers, jointers, and bricklayers (whose service were at a high demand and was at a monopoly price) were forbidden to take over 12d and afterwards 2s per day). “In January 1631 the crops having failed in England, and no crop having been raised in Massachusetts Bay, grain was at famine prices. Including freight, wheat was 14s. per bushel, peas 10s. Indian corn from Virginia 10s. Many cattle died. A cow was worth 25 or 30 pounds.” * Before America’s independence the colonial economies struggled with the availability of money to go around. Colonial governments made attempts to solve the problem by using nails, tobacco, and animal pelts for currency, giving each a set amount of shillings or pennies so they could intermix with the pre existing system. “The most successful ad hoc currency was wampum, a......

Words: 854 - Pages: 4

Currency War and It's Influence for Indonesia

...Currency War Issue Currency war becomes hot topic in several mass media lately. G-7 group even reminded, war could disrupt the currency of world economic growth. This war was carried out by countries that want to increase exports. Countries deliberately weakening its currency exchange rate so they could increase their exports. The world financial leaders including the World Bank and International Monetary Fund (IMF), has also discussed this issue at a meeting in Washington in early October 2010. On the occasion, the IMF warned the governments in some countries not to use exchange rates as a tool to encourage increased exports, because it can cause a currency war between the countries in the world. Some countries being criticized for its policies to keep their currencies remain weak. Japan, for example, they intervene for the first time since 2004, to sell 2.12 trillion yen on September 15. This is to protect the increase in the yen exchange rate that has reached its highest level in 15 years. The debate actually starts from the currency war between China and the United States. US have been protesting China over the years. US judge China to hold its currency not to strengthen to protect its exports. US even plans to establish sanctions against China for not allowing its currency to strengthen against the U.S. dollar as it should. China's rapid economic growth has caused China's trade surplus against its trading partner countries to increase. In the second quarter of 2010...

Words: 1308 - Pages: 6

Devaluation of Currency

...services or other monetary units with which that currency can be exchanged. ‘Devaluation’ means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. There many reasons for devaluation, and but most have severe consequences that do more harm than good. One of the main reasons a country devalues its currency is to increase its ability to bring in production from the outside and boost its own labor and development. When outside currencies are much stronger, a country can attract international business with cheaper production and labor costs by having a lower valued currency. Alternatively, a country may want to recover its currency from overseas holders. By devaluing the currency it becomes worth less and cheaper to buy back. They country can then re-inflate the value again over time to bring it back to its original state, however it’s no longer sitting overseas. Finally, a country may want to devalue its currency to pay off international debt. If its original loans were made in the same currency, the country could devalue the monetary value by printing more to then pay off the loan faster. This approach gets the borrow The fastest way to devalue a currency is through inflation. When inflation occurs, it takes more currency to buy the same product or service. The value of the currency unit becomes less relative to goods and......

Words: 1357 - Pages: 6

Reference

...(Jurevicius, 2013) References Dalavagas, I. (2015, May 11). McDonald's Corporation : A Short SWOT Analysis. Retrieved from Value Line: http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_Analysis.aspx#.VZawLfmqqko Jurevicius, O. (2013, February 16). SWOT analysis of McDonalds. Retrieved from Strategic Management Insight: http://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis References Dalavagas, I. (2015, May 11). McDonald's Corporation : A Short SWOT Analysis. Retrieved from Value Line: http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_Analysis.aspx#.VZawLfmqqko (McDonalds SWOT Analysis, n.d.) References Dalavagas, I. (2015, May 11). McDonald's Corporation : A Short SWOT Analysis. Retrieved from Value Line: http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_Analysis.aspx#.VZawLfmqqko Jurevicius, O. (2013, February 16). SWOT analysis of McDonalds. Retrieved from Strategic Management Insight: http://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis McDonalds SWOT Analysis. (n.d.). Retrieved from Assignment Point: http://www.assignmentpoint.com/business/mcdonalds-swot-analysis.html (History, n.d.) References Dalavagas, I. (2015, May 11). McDonald's Corporation : A Short SWOT Analysis. Retrieved from Value Line: http://www.valueline.com/Stocks/Highlights/McDonalds_Corp___A_Short_SWOT_Analysis.aspx#.VZawLfmqqko History. (n.d.). Retrieved from I'm......

Words: 336 - Pages: 2

Currency

... GRAND PROJECT ON CURRENCY DERIVATIVES NANCY SHAH – PROJECT TRAINEE CHAPTER 2 INTRODUCTION TO CURRENCY MARKETS 2.1 BASIC FOREIGN EXCHANGE DEFINITIONS Spot: Foreign exchange spot trading is buying one currency with a different currency for immediate delivery. The standard settlement convention for Foreign Exchange Spot trades is T+2 days, i.e., two business days from the date of trade. Forward Outright: A foreign exchange forward is a contract between two counterparties to exchange one currency for another on any day after spot. In this transaction, money does not actually change hands until some agreed upon future date. The duration of the trade can be a few days, months or years. For most major currencies, three business days or more after deal date would constitute a forward transaction Base Currency / Terms Currency: In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is called as the terms currency. Exchange rates are quoted in per unit of the base currency. E.g. The expression US Dollar–Rupee, tells you that the US Dollar is being quoted in terms of the Rupee. The US Dollar is the base currency and the Rupee is the terms currency. Exchange rates are constantly changing, which means that the value of one currency in terms of the other is constantly in flux. Changes in rates are expressed as strengthening or weakening of one currency vis-à-vis the other currency. Changes are also......

Words: 15256 - Pages: 62

Is the War on Terror a Just War? Explain, with Reference to Both Jus Ad Bellum and Jus in Bello.

...I will argue that the ‘war on terror’ declared by the Bush administration and so assessed for the US; is not a just war. It fails in the central interrelated criteria of just cause and last resort for jus ad bellum, which I detail first through assessment of the Bush administration’s self-proclaimed just reasoning behind resorting to war against a concept, and the alternatives available to it, I will then detail its failure in the jus in bello criteria of discrimination and proportionality, reasoning through the case of drone warfare. Jus ad bellum I shall firstly focus on the crucial jus ad bellum principle of just cause, holding the only just cause for war to be self-defence . The USA and its allies suffered unjust, unprovoked terror attacks, notably to embassies and battleships, as well as ultimately the 9/11 disaster, and further possessed reputable evidence of other failed attacks. Thus this essay acknowledges that they were under-attack from a powerful and effective enemy, which could be reliably pinpointed as Al Qaeda. These attacks were focused on non-combatants in landmark locations; deliberate targeting for maximum terror spreading effect, which further represented an attack on western freedoms. Hence the assailant satisfied neither jus ad bellum, nor jus in bello, and without immediate and effective action there existed great potential for further unjust attacks. This was the Bush administration’s argument for sufficient reason to declare war in self-defence......

Words: 2219 - Pages: 9

References

...References American Academy of Pediatrics, Committee on Nutrition, “Prevention of Pediatric Overweight and Obesity: Policy Statement.”Pediatrics 112, no. 2 (August 2003): 424-430. American Academy of Pediatrics, Prevention of Pediatric Overweight and Obesity, 2003 (Outside Source). Downloaded June 18, 2012. American Heart Association, “Exercise (Physical Activity) and Children.” American Heart Association, http://www.americanheart.org/presenter.jhtml?identifier=4596 (accessed June 10, 2012). Associated Press, “State study suggests national child obesity problem.” CNN.com, June 4, 2004,http://edition.cnn.com/2004/HEALTH/diet.fitness/06/04/obese.children.ap/index.html (accessed June 15, 2012). Centers for Disease Control and Prevention. Preventing Obesity and Chronic Diseases Through Good Nutrition and Physical Activity (PDF; Outside Source). Accessed May 2012 Centers for Disease Control and Prevention, http://www.cdc.gov/nccdphp/aag/aag_dash.htm (accessed June 8, 2012). “Community Nutrition: Obesity Prevention Program.” Duval County Health Department, http://www.dchd.net/obesity.htm(accessed May 31, 2012). Just, David R. and Brian Wansink (2009), “Better School Meals on a Budget: Using Behavioral Economics and Food Psychology to Improve Meal Selection,” Choices, 24:3, 1-6 Wansink, Brian, and David Just (2011), “Healthy Foods First: Students Take the First Lunchroom Food 11% More Often Than the Third,” Journal of Nutrition Education and Behavior, Volume......

Words: 315 - Pages: 2