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3- The foreign exchange crisis in August 2018 in Turkey showed us that the impossible trinity has not been held anymore.
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- As you know, when Greece joined the euro area in 2001, its long-term interest rates converged with Germany's (core country of the euro area). This long-rate convergence had also occurred within the set of original euro area members, around the time of the advent of the euro (1998). During the global financial crisis, some of those spreads have reemerged, and recently, Greek 10-year rates were about 1,000 basis points higher than Germany's. Q1) Do you think the level of German long-term rates will increase or decrease over the next year? WhyCould you add more information regarding the below statement? "The Federal Reserve System plays a massive role in not only the economy of the united states but alos in the global economy. The US dollar is one of the most popular and well recognized forms of currency all around the world, making it the basis for many financial transactions and trades. This popularity and standardization in regards to the dollar makes it one of if not the most important currency in the world, whose value has implications on nearly every aspect of trade, consumers, and even other countries wellbeing. Because of this, the fed, who has the ability to influence the value of the dollar and the economy, is likely the most important financial institution of the world, because of it's ability to severely impact both positively and negatively the united states economy and the world economy. With the recent inflation, I do think that the fed should take some action to mitigate the risk of any catastrophic…As you know, when Greece joined the euro area in 2001, its long-term interest rates converged with Germany's (core country of the euro area). This long-rate convergence had also occurred within the set of original euro area members, around the time of the advent of the euro (1998). During the global financial crisis, some of those spreads have reemerged, and recently, Greek 10-year rates were about 1,000 basis points higher than Germany's. Given your reading of the case, and in light of the theory covered in our lectures answer the following questions: Q1) Do you think the level of German long-term rates will increase or decrease over the next year? Why
- Case study—  THE IMPACT OF THE OIL CRISIS ON SECURITY AND FOREIGN POLICY IN GCC COUNTRIES Given the fact that there is considerable diversity in the sources of oil as the energy needed by the world, and the fact that the United States, which is one of the largest consumers of energy from hydrocarbon, has become a significant producer of oil with technological development, it is likely that the current low oil price and volatility will continue for a considerable amount of time (Krauss 2016: 1). This volatility and low price are likely to continue to adversely affect GCC countries given their high dependence on oil and gas for government budgets. GCC countries in dealing with their foreign and security policies going forward during the current and future periods of oil price falls and volatility: Economic diversification that reduces overdependence on high oil prices is likely to support a GCC socio-economic and political future by ensuring that the oil price does not have a…If a country is a big exporter, is it more exposed to global financial crises?Assume the following exchange rates Value of Canadian Dollar in U.S dollars $.92 value of New Zealand dollar in U.S dollars $.32 Value of Canadian dollar in New Zealand dollars NZ $3.00 Given this information, starting with U.S dollar, you and others can perform triangular arbitrage by________. a. Using U.S dollar to buy New Zealand dollar at $.32. b. Using U.S dollar to buy Canadian dollar at $.92 c. Using New Zealand dollar to buy Canadian dollar at NZ$3.00 d. Using U.S dollar to buy Canadian dollar at NZ$3.00
- Suppose that company A has an asset worth £10 million yielding an interest of 7%. Suppose that A is a company based in Japan. Explain how it can use a currency swap to transform the asset to an asset paying Yen (currency in Japan).The Mexican peso crisis was significant in that it was perhaps the first serious international financial crisis touched off by cross-border flight of portfolio capital. International mutual funds are known to have invested more than $45 billion in Mexican securities during a three-year period prior to the peso crisis.Required:a) Summarize the commonalities from Mexican Peso Crises, the Asian Crises, and the Argentine Peso Crises; b) In an integrated global financial system, a financial crisis in one country can easily be transmitted to other countries causing a global crisis. What measures would you propose to prevent such crises from occurring? c) Describe the incompatibility trinity and discuss its implications. d) Discuss the criteria for a good international monetary system.State whether each of the following events involves a financial inflow to or outflow from the Kenyan economy. Explain your answer. i)Export sales to Uganda ii) Returns being paid on past Kenyan financial investments in Rwanda. iii) Foreign aid from Kenya to Djibouti iv) Imported oil from Oman v) Chinese investors buying Kenyan real estate
- Give an example in the recent past when the Central Bank intervene in the foreign exchange market in Jamaica and discuss why it intervened.Q. 3 Would you please explain to me each point with an example, a least one or two? • An international business transaction in which all or partial payments are made in kind rather than cash. Similar to barter. • Used when conventional means of payment are difficult, costly, or nonexistent. • Accounts for between 10% and 1/3 of all world trade. • Common in large-scale government procurement. • Risky. May involve inferior or hard-to-price goods; may lead to price padding; Can be complex, cumbersome, and time-consuming.Compared to past results, the latest BIS Markets survey shows which of the following characteristics in the foreign exchange market in 2022? (Select all that apply.) A. low volume B. low volatility C. high volatility D. high volume
