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It is important for the Indian economy to stabilize its currency in the long run to remain attractive for foreign investments. This can be achieved by direct intervention of Central Bank in the Forex market. Other efforts to stabilize the currency include liberalization of the interest rates and limiting intra-day limit of foreign dealers. Another way to boost the economy is to improve trade balance. This can be done by raising subvention for small and medium term exporters to increase the level of exports. Use of hedging strategies on part of the importers and exporters could minimize losses arising from the exchange rate. Also in respect to the Indian market, it has been observed that the depreciation of rupee has not been passed on to consumers, as majority of the items like, cooking gas, kerosene and fertilizer, are subsidized. Hence, removal of subsidies will help the government to pass the costs to people in order to discourage imports of these items. The fiscal deficit of the government is likely to reduce if higher price of energy is passed onto consumers, thereby bringing down the prices for energy imports. Finally, the government can create favorable environment in the country for the purpose of attracting FDI. FDI has been identified as a credential source of funding for most emerging countries like, India and China. Therefore, proactive liberalization of FDI in the Indian economy will be helpful in attracting investors. Enhancing freer investment in sectors, such as, retail, can help to draw in fresh investments in the economy. 13
Tapering monetary policy adopted by many developed nations is putting pressure on the emerging countries. On December 2013, the Federal Reserve Bank of the U.S.A. announced that it would begin to lower bond purchases by $10 million on a monthly basis. Since announcement of this news, the emerging economies began to feel weight of the probable consequences of this action. Possible
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From the study it can be comprehended that devaluation of currency brings benefits as well as cost economies in different ways. It’s the important policy decision. Devaluation has macro and micro level implications for the economy. Shared or common currency decision is also the one with its blessings and curses.
Moral hazard occurs when borrowers are actually tempted to engage in activities that are undesirable for the lender while adverse selection takes place before any transaction occurs whereby the borrowers are most likely to produce negative outcome for the lender who is most likely seeking loans and are most likely to be chosen for the loans requested for (Haan & Eijffinger, 2005).
Qualifications for the Next Managing Director of International Monetary Found. The International Monetary Fund is referred to as an intergovernmental organization with the aim of overseeing the global financial system. In doing so the IMF follows the macroeconomic policies those countries registered with it particularly those countries which have an effect to the exchange rate as well as the balance of payments.
In terms of investment in Asia there is growing worry about state banks. Still, Andrew Sullivan indicates that China’s domestic economy has experienced strong indications and has attempted to eliminate speculative practices. In addition, there is a great amount of money that is not stored in the banks and remains in the hands of the people.
Running Head: ABBREVIATED TITLE OF YOUR CHOICE (all caps) Will China Revalue its Currency Introduction China has revalued its currency at many occasions since the beginning of economic reforms in 1979.
This shows that the Australian consumers and the American consumers have an equal PPP with their respective currencies. The exchange rate between Australia and America will be stable (Tanzi and Gupta 141).
PPP exchange rate of U.S and Canada is 1. The
This rush is motivated by the perception that the value of the property and or the assets will decline, leading to losses.
The world has experienced many financial crises over the past century. While it is difficult to determine the actual causes of financial crises, some
Incidents such as collapse of Union of Soviet Socialist Republics, financial crisis and great recession of 2008, the political movement famous as “Arabic Spring” etc has changed the demand supply equilibrium
Interest rates rely on a person’s time preference meaning how individuals value a pound in the future in relation to today. People who have high preferences put more attention on the present and value assets today much higher compared to the future, whereas people with low