Global Financing and Exchange Rate

Gold-backed money, also known as hard currency, is money that can be converted to actual gold. It used to be this way. Your dollar was as good as gold. On August 15, 1971, the United States decreed that the US dollar would not be gold backed. President Richard Nixon said, “let it be done” and American dollars became a fiat currency.

An international banking cartel led largely by House Rothschild, has taken control of virtually every countries money supply and installed a fiat currency that they own. This process is not a fast one. It is not measured in month, years, and decades but, instead, by generations.

During the second half of 1997, currencies and stock market prices plunged in value across Southeast Asia, beginning in

Ever since the US dollar went off the gold standard in 1971, other countries have had doubts about keeping the dollar as the world’s reserve currency. The first concern was that no fiat currency has succeeded long-term. In a study of 775 fiat currencies (Mack, 2011), there was no historical precedence for a fiat currency that has succeeded in holding its value. 20 percent failed through hyperinflation, 21 percent were destroyed by war, 12 percent destroyed by independence, 24 percent were monetarily reformed, and 23 percent are still in circulation approaching one of the other outcomes (Mack, 2011). The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month (Mack, 2011). It is one thing if an individual country’s fiat currency collapses, but if a world reserve currency collapses, such as the US dollar, the world’s economy will collapse with it.

It was found that, in the FX market, HFT was active in most liquid currency markets and prevalent among dominant currencies.

We are using the third currency pair i.e. GBP/USD for the conduct of the study and the appreciation / Depreciation of these currencies over the

Global finance operations include financial procedures, such as accounting, financial planning and analysis, strategic planning, treasury, investor relations, and financial compliance. Exchange rate is the existing market cost for which one currency can be exchanged for another (Moffatt, n.d.). For instance, when the U.S. exchange rate for the Japanese Yen is ¥1.10, this means that 1 American Dollar can be exchanged for 1.1 Japanese Yen. The purpose of this paper is to analyze the exchange rate mechanism (Euro Currency Markets), to describe how this mechanism is used in global financing operations, and to analyze its importance in managing risks.

Answer: To peg the value of its currency to another currency, the government must make a market in the two

Economic differences such as national income, money growth, inflation and trade balances between countries inhibit accurate currency valuation, causing unexpected fluctuations and volatility in exchange rates. As we at CCE are based out of the United States of America, with operations across 200 countries, this volatility poses two major risks, transactional and accounting risk.

The foreign exchange market is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. (wiki.org)

Chapter 1 Multinational Financial Management:An Overview 1. The commonly accepted goal of the MNC is to:  A) maximize short-term earnings.   B) maximize shareholder wealth.   C) minimize risk.   D) A and C.  E) maximize international sales.

Our nation has been protected from the role of money as a commodity. As Americans we enjoyed a world where the U.S dollar is the primary currency of exchange and strength during the twentieth century. In Europe, the citizens often travel to a next-door nation where their currency is much different than their own. Americans frequently travel to Mexico or Canada where our U.S dollars are accepted. Now a day, our dollars may no longer be the main currency of exchange, and may not be the desired currency to hold. People ask why a currency increases and decreases in its value, and this could be because of many reasons. The cost of cash as a product that is frequently decided or situated as a consequence of government movement and universal exchange. This value is to be decided by the foreign exchange markets of the world. The remote trade rates have a ton to do with it also for instance; Exchange rates react straightforwardly to assorted types of occasions, both unmistakable and mental business cycles; offset of installment facts; political advancements; new expense laws; securities exchange news; inflationary desires; worldwide financing examples; and government and national bank strategies around others. In the event that at any given rate, the interest for money is more excessive than its supply, its value will climb. In the event that supply surpasses demand, the value will fall.

(a) Using a well articulated example show how currency options can be used to manage currency risk. Graphically illustrate the payoffs of the selected case.

International currency basically means the currency that is used and held beyond the borders of the issuing country, not merely for transactions with that country’s residents but also, and importantly, for transactions between nonresidents (Kenen 2009). For a country that have an international currency, it would meet various benefits and costs which could be analyzed from both economic and political dimensions.

According to (Sharma, 2016) since the 15th century, there has been six unofficial reserve currency. It started with the Portuguese real. On an average, these currencies remained at the top of the market for approximately 94 years. The US Dollar is the current reserve economy of the world after succeeding the British Pound 96 years earlier. Over the past one and half decade or so, the worldwide reserves of having increased nearly 400 times from $3 Trillion to $11 Trillion. Of this nearly $11 Trillion, around two-third is in US Dollars (Sharma, 2016). Nearly 90% of the global trade transactions are made in dollars, even without an American company or government involved. Hence it is very necessary to understand the impact of fluctuating US Dollar results in, not only for the US trade but the global trade scenario as well, which does affect