Bernstein, J., Gubsky, A., and Yudin, P. Under the Roof, The Moscow Times. (1995), section 830.
Fielding, David. (2000). Can Political Instability Generate Business Cycles? Evidence from the Intrifada. Retrieved 9-23-05 from unknown. Website: http://www.le.ac.uk/economics/research/RePEc/lec/lesson/econ00-9.pdf
Hong, Jung Hwa, Jones, Peter, and Song, Haiyan. (1999). Political Risk and Foreign Investment Decision of International Hotel Companies. Retrieved 9-23-05, from Hotel.Online. Website: http://www.hotel-online.com/Trends/PanAmerProceedingsMay99/PolRiskInvestHotels.html
Hubbard, Joan C. (1997). Doing Business in Moscow: Threats and Opportunities. Retrieved 9-23-05, from B>Quest. Website: http://www.westga.edu/~bquest/1997/moscow.html
What factors contribute to the fluctuation of exchange rates?
In every currency transaction there are risks due to fluctuations on the realized value of such transfers. Many different factors contribute to the fluctuations of exchange rates. There are economic factors, political factors, and psychological factors to consider. Consumer driven supply and demand plays a part in the fluctuations that take place in the currency market. Another important contributing factor when dealing with foreign exchange rates is purchasing power parity, or PPP.
Economic, political, and psychological factors contribute to the fluctuation of exchange rates in a big way. The balance of payments, monetary and fiscal policy, inflation, real and nominal interest rates, government controls, and incentives are all economic factors that play a part in exchange rates. Contributing political factors include the philosophy of leaders...
Psychological factors affecting exchange rates can include expectations of the market, forward market prices, and traders' attitudes.
Supply and demand is a large contributing figure to fluctuation of exchange rates. By this I mean that the price of one currency in any other currency is the result of forces of supply and demand in the foreign exchange market. When one country's goods and/or services are in high demand, a short supply results. This allows the country to charge more for their goods and/or services, thereby increasing that country's economy and allowing the worth of that country's currency to increase in the foreign exchange market. So you have a fluctuation in exchange rates. Though supply and demand is an economic factor, it is such a major factor in the fluctuation of exchange rates that it deserves separate mention.
Another major contributing factor to the fluctuation of exchange rates is the purchasing power parity, or PPP. PPP is important to take into account when forecasting exchange rates. Basically, purchasing power parity means that one unit of currency should buy the same amount of goods and services as it bought in an equilibrium period, despite differential rates of inflation. Consequently, a lower level of inflation would equal a rise in the PPP effect. The formula for calculating the PPP impact is: S (+1=(S ()x1+i (/1+i (. In this formula, S is the spot rate of exchange in the number of units of the home currency equal to one unit of the foreign currency, i ( is the inflation rate of in the home country, i ( is the inflation rate in the foreign country, ( is the base period or the present time, and (+1 is the future time…
Foreign Exchange Rates One of the major complaints companies and individuals have with foreign exchange rates and flexible exchange rates is that they are too volatile because they float. Several factors contribute to the volatility of the rate of exchange. These include the balance of trade, currency substitution, the differential speed of adjustment of asset markets vs. goods markets, and the news. The balance of trade affects the exchange rate because
temporal and current method for assessing translational exposure. Translational exposure describes the risk that a company's assets, liabilities, income, or equities will change due to the exchange rate change results. This is a risk that has become more common in recent decades, as we have worked to deconstruct barriers to international trade. The translational exposure risk is usually as a result of a firm's denomination of their assets, liabilities, income,
In addition, a series of joint ventures in which West German steel firms joined with East German firms and Krupp, Klockner, and Thyssen of Germany was pursuing other developmental initiatives in eastern Europe as well. Likewise, Arbed of Luxemburg was involved in steelmaking facilities in the former East Germany. According to Mangum et al., "The rising market for improved galvanizing for automobiles, appliances, canning, and other uses is producing
Foreign Exchange There are price differences between the U.S. And UK sites for Toys 'r' Us. One example is the animated Talking Ben stuffed bear, which sells for $9.99 in the U.S. And £21.99 in the UK. The equivalent U.S. price in the UK should be £6.56, so there is a substantial price difference on this product. Consumers do not, however, have the right to demand equal prices. Each nation represents its
Foreign Currency Exchange Rates Currency is fiat money -- it's a coin or bank note that has value because the government says it does and as such becomes legal tender -- one is required to accept it to fulfill a debt. When the issue of currency leaves domestic grounds and becomes an issue of foreign exchange, things become really complicated. If a company wants to buy goods or services from
country can interfere in the foreign exchange markets. In many cases, the motivation for doing so lies with propping up exporters, by lowering the value of the domestic currency. While this is the most common reason for currency manipulation, it is not the only one. In some cases, currency manipulation aids in the cause of making debt disappear, lowering the value of that debt in order that it might