Foreign exchange markets, Financial Management

At current interest rates and exchange rates, the US might have a $400 billion net financial (capital) account inflow from the rest of the world during 2010, and therefore a matching $400 billion trade (current account) deficit. 

a. Explain why the size of the net US financial inflow has to approximately match the size of the US current account deficit, because of how the foreign exchange markets work. 

b. Explain what might happen to both of these imbalances if the Chinese yuan is significantly revalued upwards against the dollar, revalued by the central bank of China and other Chinese agencies that hold massive reserves of dollars and yuan.  Explain the cause-effect of why your proposed changes in these imbalances would occur.

Posted Date: 2/23/2013 4:07:56 AM | Location : United States

Related Discussions:- Foreign exchange markets, Assignment Help, Ask Question on Foreign exchange markets, Get Answer, Expert's Help, Foreign exchange markets Discussions

Write discussion on Foreign exchange markets
Your posts are moderated
Related Questions
Value of Conversion Benefits: Having seen the measure used to analyze the convertible bonds, let us now examine the merits and demerits of convertible bonds and why or why not


Walk-through tests - Auditor • "Walk-through tests" -That is tracing one or more transactions by accounting system and observing application of internal controls. Rev

Q. Calculate Average Annual Return? An investor buys a bond in 1978 maturity in 1980 at Rs.900. It has a maturity value of 10 years and par value of Rs. 1000. It fetches RS.90

Carr, C., Kolehmainen, K. and Mitchell, F. (2010) ‘Strategic investment decision-making practices: a contextual approach', Management Accounting Research, 21, 167-84. (a) What a

Embedded Options  is a provision in the indenture that gives the issuer and/or the bondholder an option to take action against the other party.

Q. Credit Standards for Formulation of Optimum Credit Policy? Credit Standards: - Credit standards are the essential criteria set for extension of credit to customers. Decision

Suppose today's settlement price on a CME DM futures contract is $0.6080/DM. You comprise a short position in one contract. Your margin account at present has a balance of $1,700.

Who owns a credit union? Explain. Credit unions are owned by their members.  When credit union members place money in their credit union, they aren't technically "depositing"

how to calculate the net present value when there is company tax rate and rate of return assume that lease is for 2 years payable at the begining of the yr, at the end of two yrs t