foreign exchange risk
... 52. Under the current rate method, if a firm's foreign-currency-denominated assets exceed its foreign-currency-denominated liabilities, a devaluation must result in a loss and a revaluation must result in a gain. Exhibit 10.2 applies the four methods to a hypothetical balance sheet that is affected ...
... 52. Under the current rate method, if a firm's foreign-currency-denominated assets exceed its foreign-currency-denominated liabilities, a devaluation must result in a loss and a revaluation must result in a gain. Exhibit 10.2 applies the four methods to a hypothetical balance sheet that is affected ...
Trade Network Centrality and Currency Risk Premia
... using observed trade data. As predicted, a 1 standard deviation increase in a country’s centrality lowers its annualized currency risk premia by 0.9% and its interest rate differential by 1.6%, relative to the U.S. This is a large effect given that the cross-sectional standard deviation of average ris ...
... using observed trade data. As predicted, a 1 standard deviation increase in a country’s centrality lowers its annualized currency risk premia by 0.9% and its interest rate differential by 1.6%, relative to the U.S. This is a large effect given that the cross-sectional standard deviation of average ris ...
Risk-Premia, Carry-Trade Dynamics, and Economic Value of
... that a range of β-values between approximately -1 and 3 characterizes a trader inaction band, within which β might be statistically different from unity but without economic relevance. Inspired by the concept of limits to speculation, Sarno et al. (2006) investigate the relationship between spot and ...
... that a range of β-values between approximately -1 and 3 characterizes a trader inaction band, within which β might be statistically different from unity but without economic relevance. Inspired by the concept of limits to speculation, Sarno et al. (2006) investigate the relationship between spot and ...
Banking and Currency Crises: How Common Are Twins?
... government confronted by a bank run in a fixed exchange rate regime. Gonzalez-Hermosillo (1996) shows that a bank crisis may lead to a currency crisis in a poorly developed financial system where agents may substitute foreign assets for domestic assets. If banking sector unsoundness can contribute t ...
... government confronted by a bank run in a fixed exchange rate regime. Gonzalez-Hermosillo (1996) shows that a bank crisis may lead to a currency crisis in a poorly developed financial system where agents may substitute foreign assets for domestic assets. If banking sector unsoundness can contribute t ...
Exchange Rates and Monetary Policy Uncertainty
... on 20 years of high-frequency data from 1994 to 2013 for the 10 most traded currencies. We find that, in line with our theoretical model, a simple trading strategy that is short the U.S. dollar and long the other currencies yields significantly higher returns on announcement days compared to nonanno ...
... on 20 years of high-frequency data from 1994 to 2013 for the 10 most traded currencies. We find that, in line with our theoretical model, a simple trading strategy that is short the U.S. dollar and long the other currencies yields significantly higher returns on announcement days compared to nonanno ...
Local versus Producer Currency Pricing: Evidence from
... exports, prompting politicians to lash out at the European Central Bank, the U.S. trade de…cit and China’s tightly controlled currency” (Oct 6, 2007). And the American Enterprise Institute in Washington o¤ers the following catchy title in a recent article on the issue: "Mr. Trichet Sleeps as the Dol ...
... exports, prompting politicians to lash out at the European Central Bank, the U.S. trade de…cit and China’s tightly controlled currency” (Oct 6, 2007). And the American Enterprise Institute in Washington o¤ers the following catchy title in a recent article on the issue: "Mr. Trichet Sleeps as the Dol ...
International Monetary Reform and the Stabilization Problem J. Marcus Fleming
... effectiveness of international control over reserve supply would have continued to be threatened from another side, namely, from changes in the effective currency-equivalent of existing gold reserves. Though it has not proved possible to agree on any solution to the sproblem of gold valuation, all o ...
... effectiveness of international control over reserve supply would have continued to be threatened from another side, namely, from changes in the effective currency-equivalent of existing gold reserves. Though it has not proved possible to agree on any solution to the sproblem of gold valuation, all o ...
Current account reversals and currency crises: empirical
... a period of gradual reserve losses, a perfectly foreseen speculative attack wipes out the remaining reserves of the central bank and forces the abandonment of the fixed exchange rate. Second-generation models of currency crises endogenize government policy (e.g., Obstfeld 1994). Private agents forec ...
... a period of gradual reserve losses, a perfectly foreseen speculative attack wipes out the remaining reserves of the central bank and forces the abandonment of the fixed exchange rate. Second-generation models of currency crises endogenize government policy (e.g., Obstfeld 1994). Private agents forec ...
Risk-Premia, Carry-Trade Dynamics, and Speculative
... We build on Lyons (2001) who argues that deviations of the Fama-regression β form its UIPtheoretic value may not be important in economic terms as long as deviations are too small to attract speculative capital. We extend his logic to the regression constant α and argue that for UIP in a speculative ...
... We build on Lyons (2001) who argues that deviations of the Fama-regression β form its UIPtheoretic value may not be important in economic terms as long as deviations are too small to attract speculative capital. We extend his logic to the regression constant α and argue that for UIP in a speculative ...
Exchange Rates
... and making the appropriate adjustments to the dollar budget so that the spending limit shown reflects what is available to spend; c. When UNDP does the pre-financing before the payment of the last installment - this can be addressed by negotiating from the outset a smaller percentage to be disbursed ...
... and making the appropriate adjustments to the dollar budget so that the spending limit shown reflects what is available to spend; c. When UNDP does the pre-financing before the payment of the last installment - this can be addressed by negotiating from the outset a smaller percentage to be disbursed ...
Effects of an exchange rate change on agricultural
... change on equilibrium price and quantity using the traditional two country-one commodity closed system of Kost. 3 Kost's analysis is modified by the addition of a currency exchange sector. The trade sector is measured in dollars; changes in the export supply (U.S.) and import demand are shown from t ...
... change on equilibrium price and quantity using the traditional two country-one commodity closed system of Kost. 3 Kost's analysis is modified by the addition of a currency exchange sector. The trade sector is measured in dollars; changes in the export supply (U.S.) and import demand are shown from t ...
Currency
A currency (from Middle English: curraunt, ""in circulation"", from Latin: currens, -entis) in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money (monetary units) in common use, especially in a nation. Under this definition, British pounds, U.S. dollars, and European euros are examples of currency. These various currencies are stores of value, and are traded between nations in foreign exchange markets, which determine the relative values of the different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance.Other definitions of the term ""currency"" are discussed in their respective synonymous articles banknote, coin, and money. The latter definition, pertaining to the currency systems of nations, is the topic of this article. Currencies can be classified into two monetary systems: fiat money and commodity money, depending on what guarantees the value (the economy at large vs. the government's physical metal reserves). Some currencies are legal tender in certain jurisdictions, which means they cannot be refused as payment for debt. Others are simply traded for their economic value. Digital currency arose with the popularity of computers and the Internet.