StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Foreign Exchange Risk Analysis - Essay Example

Comments (0) Cite this document
Summary
The application of the market principles to public sector organizations and operations resulted in the fascination with the markets in China resulted in quasi market forces on state activities and there is considered as pervasive and profound. In china the macro economic management involved the public service provision and social program delivery…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
Foreign Exchange Risk Analysis
Read TextPreview

Extract of sample "Foreign Exchange Risk Analysis"

Download file to see previous pages The policies in china resulted in a successful market economy and indigenous private sector. This resulted increase of foreign trade and inward investments. The high growth recorded in China regarding economic activity and manufacturing, prompted many companies to export to establish manufacturing units in China.1
The exchange rate in the international market is dominated by US dollar. The imbalance in the system can be considered as a reason for instability. The foreign exchange policy by any state should have a long term agenda to appreciate it along with the increasing exports, which is a difficult thing. As per now the USD is international currency and Euro and Yen are trying to replace it. For this purpose the currency should fulfill the classical money functions. This makes the countries like china to have US currency up to some extent and this leads to appreciation of that currency resulting in increasing the import costs. If any country wants to appreciate its currency, it must be accepted by lot of people and countries in the world. This increases demand for that particular currency and can be appreciated. 2
The reason for the change in the foreign economic relations and exchange of Yuan with other currencies is due to opening of its economy to the outer world. The private foreign capital was used to increase the economic development. As China absorbed the new capitals, the currency was being appreciated. The increase of manufacturing sector simultaneously provided the foreign exchange to china to import the requirements. As it followed the self reliance the imports are kept at a limitation and this resulted in appreciation of its currency over the international currencies.
As a result 1USD can fetch only 7 Yuan and this is due to the acceptance of the Yuan by different countries like the members of ASEAN and other countries. The self reliance and control of imports also made Chinese currency appreciate gradually over USD in the course of time. As per Nike company is considered it can export its goods into china. One reason is that there are very less currencies like Yuan that are very close to the value of US. This makes the company to make more profit in China than the countries like India, which have 1USD = more than 40 Indian rupees. So, instead of exporting the products to the countries like in India, it is better to export to country like China for Nike. Though it results in decrease of foreign investment, this resulted in healthy competition and growth of economy. 3
From the hardened stand in 1949-50 the US policy has been liberalized from then on China. UK along with US favored China and both of them relied heavily on china. The policies of US and UK made china to implement the economic reforms. 4 After the end of China's Civil war both other parts of the world and China recognized the importance of China and the openness of the economies. After Europe, Britain considered the China to be important according to American influence. Out of its large investments in the world, the British and Americans have substantial investments in China. China, which was ranked below Hong Kong and Malays by US in the preferential treatment emerged as the front runner in the economic refo ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 words”, n.d.)
Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 words. Retrieved from https://studentshare.org/miscellaneous/1506319-foreign-exchange-risk-analysis
(Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 Words)
Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 Words. https://studentshare.org/miscellaneous/1506319-foreign-exchange-risk-analysis.
“Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/miscellaneous/1506319-foreign-exchange-risk-analysis.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Foreign Exchange Risk Analysis

Foreign Exchange

...? Foreign Exchange Question How did the Bretton Woods system operate? What caused its collapse? Some think the current system of managed but floating rates is too unstable. What would generate the instability? The Bretton Woods system is a landmark system designed for monetary exchange rate management that came to play in 1944. The Bretton Woods agreement was developed in New Hampshire in 1944. The major outcomes of the agreement were the formation of an International Monetary fund. The system proposed the introduction of a pegged foreign monetary exchange rate system that was adjustable. Under the system, other than U.S, other countries central banks were assigned the task of maintaining a fixed exchange rate between the dollar...
3 Pages(750 words)Essay

Measuring and Managing Foreign Exchange Risk

...ACADEMIA RESEARCH Order 158986 7080 INTERNATIONAL FINANCIAL MANAGEMENT Measuring and Managing Foreign Exchange Risk. The degree to which a company is affected by currency fluctuations is referred to as foreign exchange exposure. (Shapiro, 2003). Foreign Exchange exposure can be divided into two main types-Accounting exposure and Economic exposure. Transaction reflects the firm's risk to exchange rate movements regarding its balance sheet assets and liabilities... The terms of these transactions are established and settled at a given time period and their exposure can easily be measured by accounting systems (Mullem & Verschoor, 2005). The implicit or explicit contractual agreements have to be taken into account as well as when measuring...
16 Pages(4000 words)Dissertation

Solution for Hedging Foreign Exchange Risk

...Managing Foreign Exchange Risk; Role in Firm Value Creation Introduction With increasing number of finance organizations which are reliant on commercial foundations of the funding development, the subject of ForeignExchangeRisk is becoming an eminent aspect of concern for both the investors and the organizations. The stakes involved with investments as posed by the currency vacillations have escorted many finance investment mediums to loan mostly in dollars and Euros (Young et al, 2008). Whilst this run through of escorting in crucial currency defends the investors, it budges the ForeignExchange stakes to the finance organizations that implement the hard...
6 Pages(1500 words)Case Study

Starbucks and Foreign Exchange Rate Risk

... 14 December 2008 Starbucks and Foreign Exchange Rate Risk Starbucks Corporation is a specialty coffee retailer famous globally because of its unique business model anchored in the provision of a third place for customers aside from home and workplace. Its phenomenal success in the United States in its early years has been well documented and has been duplicated in other nations through expansion strategies. This paper will focus on its operation in an Asian country Philippines which have seen huge improvement in its currency in the recent years. The pricing of Starbucks in the Philippines is much like in the United States where a cup of coffee starts at $3. During its first years in the Philippines, one dollar is equivalent to fifty...
2 Pages(500 words)Essay

Foreign Exchange Risk

...Question Foreign exchange risk is one of the most common risks that any multinational or a firm having international operations confronts. These international operations might be in the form of manufacturing, exporting, importing and retailing. A manufacturing concern would be exposed to foreign exchange risk if it is operating in a foreign country by means of subsidiaries etc. Manufacturing operations in a country with highly unstable foreign exchange is ultimately exposed to foreign exchange risk. The depreciation or appreciation of exchange rate in any of the two countries, the domestic as well as international market, would have a significant impact on the firm’s revenues and future cash flows. Exporting and importing also implies...
6 Pages(1500 words)Essay

Foreign Exchange

...FOREIGN EXCHANGE SITUATION: You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for next month. Considering that your company possesses only U.S. dollars, identify the spot and forward exchange rates. THE SPOT AND FORWARD EXCHANGE RATES The spot rate per Table 11.1 is Y1 = $0.00903.50, which means that if I buy 100,000 Japanese yen today , I will need to pay $903.50. The forward exchange rate for a month from now is $0.00904.80; the 3-month and 6-month quoted rates are, respectively, $0.009074 and $0.009124. The trend is for the Japanese yen to rise in value over the next six months. ANALYSIS Looking at Table ll.1(Foreign Exchange Quotations, p.5) I see that the Monday 1-month...
2 Pages(500 words)Essay

Foreign Exchange-Rate Risk Management

...Foreign Exchange-Rate Risk Management for UK Listed Companies Introduction The need for foreign exchange has arisen from the requirements of companies and individuals for foreign currencies when they transact business abroad. Multinational companies and international traders must quote their prices in a vehicle currency such as the U.S. dollar when they export or request quotations in order to purchase equipment and raw materials from another country. In all these, the variability of the exchange rates -- the rate at which one countrys currency can be traded for another countrys currency -- can pose a problem for the party concerned when the changes are adverse. This paper will explore the different ways by which business entities can...
8 Pages(2000 words)Case Study

Foreign Exchange Rates and Exchange Rate Risk

The rates therefore are either determined through the market forces or by the central bank of the country to maintain and manage them at a reasonable level.
It is also important to understand that when global firms deal in foreign exchange they also expose themselves to various risks. Every firm which deals in foreign currency therefore have to fact these risks and use different hedging methods. These methods vary depending upon the needs of the organization as well as the nature of the transaction. It is however, critical that each firm has to face these risks and must also manage them in order to avoid losses or reduce the risks and manage it at acceptable level.
An exchange rate is the rate at which one currency is actu...
4 Pages(1000 words)Essay

Exchange risk

.... J. (2003). Managing Currency Risk Using Financial Derivatives. Chichester, John Wiley & Sons. http://public.eblib.com/choice/publicfullrecord.aspx?p=152679userid=^u. HULL, J., & HULL, J. (1997). Options, futures, and other derivatives. Upper Saddle River, NJ, Prentice Hall. HICKS, A. (2000). Managing currency risk using foreign exchange options. Boca Raton, [Fla.], CRC Press. BATTERMANN, H. L., & BROLL, U. (1997). The use of derivatives markets for hedging currency risks. München, Volkswirtschaftliche Fak., Ludwig-Maximilians-Univ. BOS, C. S., MAHIEU, R. J., & DIJK, H. K. V. (2001). Daily exchange rate behaviour and hedging of currency risk. Amsterdam, Tinbergen Institute. PAPAIOANNOU, M., & ROCHON, C. (2006). Exchange rate risk...
4 Pages(1000 words)Case Study

Internal and External Environmental Analysis for the Bakery Business

Liberalization of foreign investment and technology policy of the government is supportive of establishing industrial units in the country.

Threat: The UK food regulatory authority is planning to enforce the EC Regulations relating to food labeling. The labeling requirements under the new regulations will affect the food industry as the suppliers will be legally obliged to disclose the GM content of foods to the caterers. Thus business firms in the bakery industry also will be effected through the exclusion of flexible manner of labeling arrangements in the case of flour confectionery involving GM Soya or maize. (Genetically modified and novel foods (labeling) (England) regulations, 2000).

Trend: The new subs...
6 Pages(1500 words)Case Study

The Necessity of Job Analysis

... Lecturer: presented: Job Design Job design is an arrangement of procedures and organization of work which indicates the techniques and the interactions which are put in place in order to suit the technical and managerial requirements while on the other hand to satisfy the individual needs of the employees. It highlights the occupation structure, the duties of the workers as well as guidelines regarding the information which the worker is supposed to access. The importance of job analysis in human resources is to help the management to ascertain and endorse the usefulness of certain activities which take place in employment such as employment procedures such as training, choice of the appropriate employees, reparation as well...
7 Pages(1750 words)Coursework

The Relationship Between Security, Risk and Health in a Large Organisation

...The relationship between Security & Risk and Health & Safety in a large organisation "Assess the relationship between Security & Risk and Health & Safety in the context of a large organisation. Are they complimentary or the demands of one conflict with or inhibit the realisation of the other? Identify and discuss the implications of your assessment for the roles of the security manager". 1. Introduction The development of commercial activities worldwide has been extremely rapid; firms operating in various industrial sectors need to confront a series of challenges in order to ensure the limitation of risk related with their strategic initiatives. Within this context, the issues of security, risk, health and safety are very likely to appear...
9 Pages(2250 words)Coursework

Analysis of the Methods of 3 Research Papers about Child Abuse

Research ethics was maintained as the identity of the individuals participating was kept secret. As far as the validity of the study was concerned, the researchers attempted to use content validity in order to get an accurate response. The content validity focused on measuring off the ethnicities and gender percentages within the area and attempting to get a random sample of individuals via the phone. Their approach to random calling allowed for a significant random sample in the study. There were a few issues, however, with this type of approach. Those answering the phone sometimes were not always the desired individual, and not all of the desired people were surveyed. Different replacements did have to be used, and the attempt w...
6 Pages(1500 words)Literature review

Comparative Family Analysis

The second component of this essay will be a comparative analysis with the American family to the Arab family, generally speaking, but also clearly described by Homa Hoodfar, in her book Between Marriage and the Market. This essay will discuss the impact of globalization on different types of families in different societies and cultures. The terms ‘traditional’, ‘modern’ and ‘postmodern’ will be defined, elaborated upon and discussed on a continuum of change. Social change, in the face of globalization, will be discussed in relation to how cultures and families have grown or resisted the forces of globalization. We now turn to an exploration of the types of families in the world and follow...
6 Pages(1500 words)Coursework

Economic Analysis of India

The country’s economy is fast growing with a stable political system that encourages foreign investment although with certain restrictions. The country generally has good energy, transport and communication systems which make the cost of doing business affordably.

The Republic of India found South of Asia is by far the world’s most populous democracy and ranks seventh largest in terms of geographical area (Brown, 1994). India is also the second most highly populated country in the world. The country has a rich culture with four major religions having originally emerged from it; Sikhism, Buddhism, Hinduism, and Jainism. The Indian Republic consists of seven union territories and 28 states and ranks twelfth la...
8 Pages(2000 words)Case Study

Airbus A 380: SWOT and Porters Five Forces Analysis

... this does not mean that the pilots are not needed, it is nonetheless an important aspect that the aircraft can go on “auto pilot” whenever desired. This comes in handy when there is rough weather or the landing conditions are inclement. The Airbus A 380 was built using the composite materials for the aircraft. This gives extra strength to the wings and underbelly and mitigates risks of accidents involving these parts. It can be said that building an aircraft is like a piece of art and the thousands of parts that go into the aircraft have to fit in with each other and the margin for error is non-existent as human lives are at stake. SWOT ANALYSIS In this section, I do a SWOT analysis of the Airline Industry with specific focus on Airbus...
6 Pages(1500 words)Case Study

Analysis of Educational Website

... Analysis of Educational Website Introduction Since antiquity, education remained a major component of human societies; however, until few decades ago, it existed in the society in its traditional and conventional form that involved one-to-one interaction of teachers with their students in classrooms. Since few years, educators and scholars have witnessed rapid advancements in the field of information and technology that has altered almost every sector of the society in a rapid manner, and so the education sector as well. In such advancements, internet has now become one of the most popular platforms for students, teachers, businesspersons, and individuals from every sector to acquire education and information within few clicks and minutes...
7 Pages(1750 words)Article

Analysis of Articles about Climate Change

...Climate change Can we imagine an Earth where there are no green mountains, no deep blue seas and no living creatures? No. But a disaster of such magnitude and dimension is looming over Earth. Humans have identified this threat, defined it and given it a name, global warming. This dangerous proposition is based on the truth that even a 5 % increase in the surface temperature on Earth can wipe out life from this beautiful planet. And the temperature is increasing as never before. It was in 1990s that the world began to hear serious warnings on global warming and climate change. The summary for policy makers prepared as part of the first assessment report by Inter-governmental Panel on Climate Change was the first ever in depth... change Can we ...
6 Pages(1500 words)Literature review

Foreign Market Entry and Diversification

...Foreign Market Entry and Diversification Table of Contents Identification and discussion of the trendsin the global beer markets 3 International expansion trends and Modelo’s internal expansion 5 The next foreign market Modelo should enter 6 Challenges from InBev 7 Modelo should diversify 8 References 10 Identification and discussion of the trends in the global beer markets Beer industry is one of the largest industries in the world. Over the last few years the entire alcohol industry enjoyed a satisfactory performance. In 14th century modern beer industry started in Europe. Since the tastes of consumers vary from region to region, the industry was clustered in nature and it was dominated by several local breweries. Earlier transportation...
7 Pages(1750 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Foreign Exchange Risk Analysis for FREE!

Contact Us