TAILIEUCHUNG - Lecture International finance: An analytical approach (2/e) – Chapter 5: The international monetary system and exchange rate arrangements

The goals of this chapter are: To classify international monetary systems, to outline the history of exchange rate arrangements, to outline the pros and cons of fixed and flexible exchange rates, to examine the Australian exchange rate arrangements. | Chapter 5 The International Monetary System and Exchange Rate Arrangements Objectives To classify international monetary systems. To outline the history of exchange rate arrangements. To outline the pros and cons of fixed and flexible exchange rates. To examine the Australian exchange rate arrangements. Definition The IMS refers to the framework of rules, regulations and conventions that govern the financial relations among countries. Components of the IMS Public component consisting of a series of agreements Private component represented by the banking and finance industry Classification According to Reverse Assets Pure commodity standards (. the gold standard) Pure fiat standards Mixed standards (. the Bretton Woods system) Classification According to Flexibility of Exchange Rates Several systems may arise by restricting, or otherwise, the exchange rate. Fixed Exchange Rates The exchange rate is fixed by the central bank and is not allowed to move. The FX market is likely to be out of equilibrium. Perfectly Flexible Exchange Rates The exchange rate moves continuously, propelled by market forces, to maintain equilibrium in the FX market. Under this system, currencies appreciate and depreciate. Fixed but Adjustable Exchange Rates Countries alter the fixed values of their exchange rates. Devaluation and revaluation are implemented to ‘correct’ some economic fundamentals such as the BOP. Fixed Exchange Rates and Flexible Within a Band Exchange rates are flexible within upper and lower limits defined by a band around the par value. Central bank intervention is required to keep the exchange rate within the band. Crawling Peg The par value of the exchange rate is revised periodically according to its recent behaviour or economic indicators such as inflation. Dual Exchange Rates A commercial (fixed) rate is used for imports and exports. A financial (flexible) rate is used for trading in financial assets. Managed Floating The exchange rate is flexible, but the .

• Tài chính doanh nghiệp
• International Finance
• Lecture International finance
• Tài chính quốc tế
• Bài giảng Tài chính quốc tế
• International monetary system
• Exchange rate arrangements
• Eurocurrency market
• International banking
• Internal financing
• International short term financing
• International long term financing
• Foreign bonds
• Foreign direct investment
• International capital budgeting
• International bank loans
• Financial analysis
• Financial management
• Lecture Introduction to finance
• Financial markets
• International trade
• International business firms
• Financial manager
• Bond investment
• Equity investment
• International arbitrage
• Multipoint arbitrage
• Basel accords