If a country’s par exchange rate is overvalued, what kind of intervention would that country’s central bank be forced to undertake, and what kind of effect would it have on its international reserves? What must happen if this country’s central bank decides not to intervene anymore?

Q: d. Discuss whether Galina Works should avoid exchange rate risk by invoicing foreign customers in…

A: Foreign Exchange Risk: The risk of an abnormal loss or gain that accrues to a company on their…

Q: What adjustments might be made due to exchange rate riskand political risk to the domestic cost of…

A: The question is based on the concept of international risk management in cost of capital. An…

Q: Explain the managed floating exchange rate regime. How can the monetary authorities prevent effects…

A: The managed floating exchange rate regime refers to the effect of demand and supply on the value of…

Q: A second function of the foreign exchange market is to provide exchange possibility that unpredicted…

A: Since you have not mentioned the specific question we will just answer the first question in case…

Q: How can fluctuations in exchange rates impact Zara especially in dealing with international…

A: Answer:-  Exchange rate definition:- Exchange rate is that rate at which one country's currency can…

Q: The pressures on the foreign exchange market are such that they cause the British pound to…

A: Currency Depreciation: In this question, the pressure on the foreign exchange market causes the…

Q: Once capital markets are integrated, it is difficult for a country to maintain a fixed exchange…

A: Capital markets are places where money is exchanged between people who supply capital and those who…

Q: Some countries have low interest rates and appreciating currencies because     they are politically…

A: Some countries have low interest rates and appreciating currencies because -

Q: Would exchange rate changes always increase the risk of foreign investment

A: No, it is not necessary that the exchange rate changes always increse the risk of foriegn…

Q: hedging arrangement and how does it reduce foreign currency risk exposure

A: Foreign currency risk can be defined as the risk of change in the exchange rate of a foreign…

Q: If the downward pressure on the currency persists for a long period, even after successive…

A: Downward pressure: It is the devaluation in the value of the currency. It mainly happens when the…

Q: Which of the following is a major benefit of international lending? It eliminates exchange rate risk…

A: Lending is a form of agreement in which one party agrees to allow the other party to use a sum of…

Q: once the capital markets are integrated it is difficult for a country to maintain a fixed exchange…

A: Market is a place to exchange the products, in the financial market (FM), financial securities are…

Q: What does it mean when it is said that the United States is running a trade deficit? Whatimpact will…

A: Interest Rate:   A rate at which a borrower is ready to pay and depositor is ready to receive the…

Q: chains of events affected the Foreign Exchange Rates long term and short term

A: Factors affecting foreign exchange rates in short term: Interest rates: depreciation or appreciation…

Q: During crises like the COVID-19 crisis, major currencies such as U.S. Dollar and Euro should…

A: A currency is a method or a medium of exchange of goods and services in an economy that is used for…

Q: “Foreign exchange risk represents exposures to changes in the values of current holdings and future…

A: Net Foreign Currency exposure is the net position of the bank in the foreign exchange risk.…

Q: 22. A firm may seek to avoid exchange-rate risk by a. Maintaining a net monetary debtor position in…

A: A firm that is required to pay or receive the amount in foreign currency always has risk that…

Q: What action should the Hong Kong Monetary Authority (which is acting as Central Bank for Hong Kong)…

A: Hong Kong Monetary Authority worked under the Banking Ordinance and the Exchange Fund Ordinanc, and…

Q: Other things being constant, if the U.S. real rate of interest exceeds that of its trading partners,…

A: The term real interest rate refers to the interest rate that has been adjusted for the effects of…

Q: Exchange rates can move up or down, and spot rates could move favourably as well as adversely.…

A: Currencies constantly rise and fall, thus imposing risk to importers, exporters and local industries…

Q: Explain how exchange rate fluctuations affect the return from a foreign market measured in dollar…

A: Introduction: Exchange rate is nothing but the country’s price expressed in terms of another…

Q: According to the flow of balance of payment (BOP) approach to exchange rate determination, there are…

A: 1.a. When a devoloping country runs persistent BOP deficits for a couple of years, then it may face…

Q: Leads are deliberate early payments of amounts due to be paid in foreign currency to…

A: In the international market, the companies are dealing with exchange of transactions on the basis of…

Q: Explain about the hedging against the foreign currency risk.

A: Foreign exchange refers to the trading of currency of one country with the currency of another…

Q: does it reduce forei

A: Financial instruments can be regarded as capital bundles that can be traded, or as assets that can…

Q: exchange rate regime,

A: The exchange rate refers to the price of the money of a country and relates to the value of…

Q: The questions about Risks when investing in another country

A: Transaction risk is the possibility that a person to a trade deal will lose cash due to an…

Q: Exchange rates are highly volatile.     Exchange rate fluctuations have an adverse effect on the…

A: The central bank is responsible for the monetary policy of the country. It fixes the exchange rate,…

Q: Under a floating exchange-rate system, an increase in the international demand for electronic…

A: The term exchange rate refers to the rate that is used to convert one currency into some other…

Q: The functions of the World Bank evolved in response to... the increase in protectionism. the…

A: The World Bank is an international organization dedicated to providing financing, advice, and…

Q: Why the single currency eliminates exchange rate fluctuation and why is better for the countries to…

A: Single Currency refers to the currency used by more than one country. In other words, when more than…

Q: age destabilize foreign exchange markets? If yes, which argument do you

A: Foreign exchange market : The foreign exchange market is the market where national currencies are…

Q: Because capital flows were an important element in the currency crises, it has been advocated that…

A: Capital is the main concern through which the economy of a country has financially stable and…

Q: What are the advantages or the disadvantages of hedging with currency options as opposed to future…

A: Hedging is used to insulate the investor of the risks of currency fluctuations in an international…

Q: One proposal to stabilize the international monetary system involves setting exchange rates at…

A: The question is based on the concept of purchase power parity (PPP) theory in establishment of…

Q: Why might a foreign government’s policies be closely monitored by investors in other countries,…

A: Investors, analysts, and policymakers in other nations keep an eye on the policies of governments of…

Q: Direct Intervention How can a central bank use direct intervention to change the value of a…

A: Central bank can make a direct intervention to change the value of a currency. This is achieved by…

Currency Market

The currency market, also known as the foreign exchange market, consists of currencies worldwide. This market determines the rate of all currencies based on the buying and selling of forex. It is an over-the-counter market. It is the largest and most liquid market based on trade volume.