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
Keys Printing plans to issue a $1,000 par value, 10-year noncallable bond with a 5.00% coupon, paid semiannually. It should sell at par. The company''s marginal tax rate is 40.00%

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

GENERAL FUNCTIONS Several functions of financial management currently range from planning of funds to distribution of earnings and also are extend beyond.  Some of the well-kn

the nu-nu brothers inc. (NNBI) has the following capital structure,


State about the Quick ratio or acid test Quick ratio = Current assets less inventories /Current liabilities(times) This  ratio  measures  immediate  solvency  of  a  busin

Q. Example on interest rate movements? Cap/floor volatility is consideration to be higher than swaption volatility because the market buys volatility trough swaptions as well a

a) Cultural exports are the commercial transfer of values and ideas from one country to another. Canned crab meat is a popular local fragility in Thailand and Viya Crab Products Co

1.   Discuss the various techniques of inventory management for efficient working capital management. 2.   Discuss the importance of dividend decisions. What is MM theory of div