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
VK Ltd a multi-product Company, furnishes you the following data relating to theyear 2000.First Half of the year Second Half of the yearSales Rs. 45,000 Rs. 50,000 Total Cost Rs. 4

Which parameter better calculates value creation; the EVA (Economic Value Added), the economic profit or the CVA (Cash Value Added)? The EVA (Economic Value Added) is the profi

You are considering an investment in a 40-year security. The security will pay $25 a year at the end of each of the first 3 years. The security will then pay $30 a year at the end

#questi Saven Travel Corporation is considering several investment opportunities in order to diversify its operations. Mr. Saven, president, is trying to determine the firm''''s co

One of the most important objectives of statistical analysis is to get one single value that describes the characteristic of the entire mass of unwieldy

Lakespring Retirement Village is home to senior citizens who are fairly independent but need assistance with basic health care and occasional meals. Jill Thompson, a licensed beaut

I need a report on Accounting or Average Rate of Return. Can you please assist me for Accounting or Average Rate of Return report for about 2500 words?

The graphical method is a simple one, and is the most easily understood of the several linear programming methods. A thorough knowledge of the graphical procedure

Explain the term- Interest cover Interest cover =Profit before interest and tax (PBIT)/ Interest payable(no. of times) Interest cover represents the safety of earnings tha

These types of securities have more than one coupon rate and each subsequent coupon rate is higher (or lower) than the previous coupon rate. For