The Indian Rupee has depreciated significantly against the US Dollar and reached record lows last week. Why is this happening and what does this signify? This post talks about the dynamics of the rupee and reviews probable reasons for this depreciation.
Exchange rate for any currency pair is determined by the buying and selling pressure of the respective currency with respect to the other. If the market does not think positively about a currency then there is a downward pressure on that currency. The movement of rupee from 1991, when India changed from a fixed rate system to a managed floating rate system has been a roller coaster ride. Continue reading “Rupee @60 The Rollercoaster ride”
I always like to be bullish on things but you cannot avoid he ground realities and say bullish. The Europe’s politicians join a chorus of policy-makers across the globe pushing for devaluations to fight for market share we can expect currency conflicts.
The telegraph reported – “Jean-Claude Juncker, EuroGroup chief, has signaled that Europe is no longer willing to be the last economic player holding the toxic parcel of an over-valued exchange rate, describing the euro as “dangerously high” after its three-month surge against the dollar, yuan and yen. Continue reading “The Currency war is on”
Continue from my last post Swaps try to understand the types of swaps :
- Swap in transaction: In such transaction the base currency is bought for near delivery & sold for forward delivery
- Swap out transactions : In such transaction the base currency is sold for near delivery & bought for forward delivery.
- Forward Swaps: In such transactions both the purchase and Sell transactions Continue reading “SWAPS TYPES – (Back to school)”
A swap can be defined as simultaneously purchase and sale of equivalent amount of base currency for 2 different maturities, essentially its a simultaneously borrowing and lending of 2 currencies between 2 banks for specific period express in the form of purchase and sell transactions. The interest rate differential payable or receivables by one of the parties is factored into exchange rates applied for the 2 components of transactions. Therefore the difference between Continue reading “SWAPS : Foreign Currency Swaps (Back to school)”
RISK is a four letter word and have many definitions in different aspects. In the financial context it can be described as the probability of not achieving targeted financial performance.
Although all the business carry risk but the international business carry few additional risk exchange rate and interest rate.
Among the various participants in the foreign market the risk is faced by end users who initiate the transactions a commercial banks who provide committed rates to their Continue reading “Risk Faced by Banks in foreign currency dealings !! – (Back to School)”