crisis in 1999. Brazil, Argentina, and Colombia are countries that underwent economic crisis most
frequently
from
1980.
In
1992,
Brazil’s
inflation
rate
reached
1.175%.
Moreover
Brazil
was
supported by IMF bailout in 1998.
The range of fluctuation of the foreignexchange rate in Brazil real shows dramatic movement.
LG Business report targeting B
ADVANTAGE
Cost reduction
- price competitiveness
Local production
-Improve Local Responsiveness
Decrease
foreign-exchange loss
Why?
- Excessive
cost reduction
- Side effects of
expanding overseas
production bases
Case study : Nokia
In 2007, recalled 46,000,000 cell phone battery that supply from Matsushita
In 2009, recalled 14,000,000 cell phone charger that
Introduction
ForeignExchange Market
a market for converting the currency of one country into that of another country
Exchange Rate
the rate at which one
currency is converted
into another
The Functions of the ForeignExchange Market
Currency Conversion
To convert the currency of one country
into that of another country
Insuring against Foreign
Ⅱ. Exchange rate regime
1. What is the exchange rate?
In finance, the exchange rates between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency. For example an exchange rate of 91 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that 91 yen is worth the
foreignexchange risk of the market risk.
The company operates primarily in Korean Won (KRW) and its official accounting records are maintained in Korean Won. The effect of foreign currency risk to net income is a sum of net foreign currency fluctuations of Korean Won against other foreign currency fluctuations. Foreign currency exposure to financial assets and liabilities of a 5% currency rate
외환시장의 구성
외환시장(foreignexchange market) 은 크게 두 가지 주요 기능이 있다. 첫 번째는 국제경영활동을 위하여 한 나라의 화폐를 다른 나라의 화폐로 교환하는 기능이고, 두 번째는 변동환율제에서 환율변동의 불확실성에 따른 환 위험(foreignexchange risk)에 대처하는 기능이다.
① 교환기능: 국제
rapid growth since 1963. Real GNP grew at an average annual rate of 9.0 percent between 1963-93. As a result, Korea's status changed from an underdeveloped country in the 1960s to an upper mid-level developing country in the 1990s. It is well known that foreign debt and the government's active economic policy played an important role in her economic growth. Korea's successful pursuit of an
2. Policy Analysis with Partial Capital Mobility
• Expansionary fiscal policy, fixed exchange rates
IS curve shifts right, Y and R increase.
Higher R increases foreign capital inflow.
• Creates BP surplus and upward pressure on currency.
Central bank intervenes in the foreignexchange market.
• Buys excess foreign currency.
Incr
DEFINITION
A system that is in a middle of fixed and flexible. It limited the range of exchange rate fluctuation about certain currency within certain range(1~2.25%).
The fixed exchange rate system ( 1945. 10 ~ 1964. 5 )
The unitary fluctuation foreignexchange system ( 1964. 5 ~ 1980. 2 )
The multicurrency basket system ( 1980. 2 ~ 1990. 2 )
Average exchange rate system ( 1990. 3 ~
exchange rates
U.S. $ 가 아닌 다른 두 개의 외화로 표시되는 환율
통화(화폐)의 가격은 물품이 변동을 거듭하는 것처럼 변동을 거듭한다.
Currency Appreciation and Depreciation (통화의 평가절상, 평가절하)
‘Appreciate’: 화폐가 다른 화폐와의 관계에서 가치가