Global Financing and Rate Essay

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Global Financing and Exchange Rate Mechanisms Veronica L. Powell University of Phoenix MGT/448 Donald Joseph March 31, 2009 Global Financing and Exchange Rate Mechanisms Currency is unreliable. In some countries the United States dollar is worth more than that countries currency, while in other countries the U.S. dollar is worth less. The exchange rate fluctuates on a continuous base which makes the term “funny money” more realistic each day. The purpose of this paper is to discuss hard and soft currency, the South African rand, Cuban pesos, and why the exchange rates fluctuate. Hard currency is a currency, usually from a highly industrialized country, that is largely accepted globally as a form of…show more content…
The rand is a parallel currency that was exclusively used for nonresident capital movements during the 1980s and 1990s. The financial rand was available to foreigners for investment only in South Africa was formulated by the sale of nonresidents’ assets in the country (Country Data, 1996). The two-tiered currency system insulated the country’s foreign reserves from politically stimulated capital flight, because all divestment by nonresidents were automatically met by new investment, and the price of the financial rand varied independently of the commercial rand (Country Data, 1996). Ultimately, South Africa’s economic growth depends upon increasing gold profits and foreign investments. The Cuban Pesos (CUP) is the official currency in Cuba. The American dollar is not accepted on government business in Cuba since November 2004. All of the stores that sold goods in American currency changed to the Cuban Convertible Pesos (CUC). Pesos convertibles cost the equivalent of $1.18 United States Dollars (USD). In Cuba, currency is exchanged every day, and it is a known fact that the pesos are unstable. The Cuban Pesos is equivalent to 100 cents (centavos). The notes can be of the following denominations: 1, 3, 5, 10, 20, 50, and 100 pesos; coins can be of 1, 5, and 20 centavos (Cuba Currency, 2005).
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