China’s exchange rate is being controlled by the People’s Bank of China (PBoC: China’s central bank).PBoc manage the value of the yuan. PBoc fixed the USD/CNY rate on trading. This is the exchange rate applies to trade in and out of the china. The reasons for China to use the fixed exchange rate because keep the low value of the currency versus its trade partners. These make China’s export cheaper, and thus more attractive.
Formerly if the tariff is supposed to make price of the good increase to allow local manufacturers to sell at a greater price, the tariff might not have much of the anticipated effect. A quota might do more to increase price. Nevertheless, in competitive markets there is continuously particular tariff that increases the price as great as the quota
Moreover, Alliance Bank’s team will give consultation regarding the pricing information and up-to-date rates to those who are planning to trade in international markets, go travel overseas or make investments in foreign currencies. The foreign exchange market products that offered by Alliance Bank are as follows: i. A forward exchange contract is an agreement subject to which a business consent to purchase a certain amount of foreign currency on a particular future date. The purchase of foreign currency is done at an agreed exchange rate. Besides, forward exchange contract is to eliminate the foreign exchange position in order to evade the losses or it is to play on the future changes in an exchange rate in position to make
This would lead to an increase in national income by a multiple. Here, economic growth would be achieved but it may undermine the objective of a balance of payments surplus. A rise in national income may increase the demand for imports as they are positively associated with national income. The rise in demand for imports may reduce a trade surplus, and could also turn it into a trade deficit. When an economy has a stable rate of economic growth, it produces more output.
In some cases, it may increase the burden on the general economy especially if the country is currently suffering from high inflation and unemployment rates. If a Fixed Exchange rate policy was used it may alleviate or reduce these existing problems since the Central Bank would have a “closer watch” on the market and intervene as it deems fit. Interest rates, economic policy and stability within the economy promote a strong currency. A strong currency boosts the prices of exports thereby affecting the country’s ability to compete on the global market. However, whenever the currency is weakened, the cost of imports increase which increases domestic inflation.
Initially, the liquidity could raise the inflation in the asset prices, if the excess liquidity increases the demands for a fixed supply of assets. Moreover, an increase in liquidity could fall together with an increase in asset prices, if both stem from improved economic prospects, such as: a cyclical upturn can increase the money demand simultaneously, therefore it will improve the prospects for corporate earnings and leads to the stock pricing arise. In addition, the other possible situation would be that an interest rate decrease due to the increase of the liquidity may lead to an increase in equity prices by reducing the discount factors that price future cash
Individuals: The individuals here means the tourists who exchange the money while travelling abroad and migrants who send part of their earnings to family members living in their home countries. b. Firms: The firm means importers and exporters where an exporter prefers to get his payments in his home currency or in a convertible currency. Importers require the foreign exchange to make payments for their products that are imported. c. Banks: The individuals and firms approach banks to exchange the currency and the banks deal other banks which has foreign exchange departments on behalf of its customers.
Stage of Economic Development: A floating exchange rate is preferred by developing countries as most of their debts are in foreign denominations. The local banks and businesses here gain their revenues in local currency and then use them to pay off their foreign debts. If there is a fall in the economy’s currency as in a depreciation then it would make the debt pay offs more expensive for the banks and businesses to payoff resulting in financial instability in the
Through international expansion, MYDIN’s market segment will grow and this will allow MYDIN to make bulker purchases compared to now. iii. Increasing cost of living in urban area In addition, another opportunity is the rising cost of living in Malaysia. The increasing living cost is mainly due to the inflation and global economy. As a result, people tend to search for cheaper alternatives to cut