What influences currency exchange rates
Tipos de riesgo cambiario
La volatilidad del tipo de cambio en México se ha incrementado desde el inicio de la normalización de la política monetaria en Estados Unidos. Existen muchos otros factores que han incrementado la volatilidad como la desaceleración de la economía china, el Brexit, la posible renegociación del TLCAN después de las elecciones presidenciales en EU, así como factores internos, por ejemplo el lento crecimiento económico, la caída en los ingresos petroleros estatales y los altos niveles en la deuda pública. El peso mexicano es una de las monedas con peor desempeño entre las de mercados emergentes durante 2016.
Este trabajo intenta identificar las variables teóricas más relevantes que afectan el tipo de cambio en México no sólo en el largo plazo sino también en el corto plazo. Algunas de estas variables están relacionadas con las tasas de inflación entre México y Estados Unidos, las barreras comerciales, la productividad, la posición fiscal interna, las perspectivas de crecimiento y la posible baja en la calificación de los bonos soberanos de México. Otro elemento importante que ha estimulado la volatilidad es el hecho de que el peso se ha utilizado como instrumento de cobertura cambiaria en el mercado de futuros.
What factors can influence the exchange rate?
According to Mishkin (2014), there are different factors that influence the determination of the exchange rate such as relative price levels, trade barriers, preferences for domestic over foreign goods and productivity.
How is the exchange rate determined?
To find out how many dollars a certain amount of pesos represents, divide by the exchange rate, i.e., 1,800 pesos equals 1,800/18 = 100 dollars. Each country's exchange rate is determined by its exchange regime; that is, the way it decides to manage the value of its currency with respect to other currencies.
What are foreign exchange markets?
The foreign exchange market is the system or structure through which currencies from different countries or geographies can be bought and sold. The function of the foreign exchange market is to establish prices and relationships between currencies, exchanging between currencies.
The market has no physical location and operates 24 hours a day. It is a market with great transparency and a high degree of efficiency. It is an Over The Counter market, which has no regulatory body to legislate it. The Central Banks monitor the activity that takes place with respect to their currencies. Any person or company can be a participant in the market.
The parity of a currency is the price of one currency in terms of another, i.e. it is the price that relates 2 currencies. Currency quotes are made with bid and ask prices and the difference between the two, called the spread, establishes the quality of the quote.
An importer residing in Europe, if the euro rises and the foreign currency falls, the result will be that he will make a profit since the purchase of the product will be cheaper. But if the opposite happens, the euro falls and the foreign currency rises, the result for the importer will be a loss since the purchase of the product will be more expensive.
What is exchange risk?
To find out what are the national and international factors that influence the devaluation or revaluation of the Colombian peso against the dollar, we talked to the dean of the School of Economics and Administrative Sciences of the Universidad de La Sabana, Catherine Pereira Villa, an economist with a PhD in Management from the Swiss Management Center University, Switzerland.
Since the interview ended minutes before the presidential decision was announced, we have added the first question and answer of the interviewee after the video recording. Below, you can read some excerpts from the interview, which you can see in full in the video located at the top of this news item.
We have seen that yesterday's decision by President Petro, in the sense of making a big change in the cabinet, influenced the depreciation of the Colombian peso. What effects could this scenario of political uncertainty have on Colombia's economic situation?
The changes announced in the government's cabinet, including that of the Minister of Finance, have generated uncertainty in the markets because investors were confident that Minister Ocampo would maintain a responsible macroeconomic policy and compliance with the Fiscal Rule and the medium-term fiscal framework.
Foreign exchange risk pdf
SDG 1 - END POVERTYDG 2 - ZERO HUNGERDG 3 - HEALTH AND WELL-BEINGSDG 4 - QUALITY EDUCATIONSDG 6 - CLEAN WATER AND SANITATIONDG 7 - AFFORDABLE AND NON-POLLUTANT ENERGYDG 8 - DECENT WORK AND ECONOMIC GROWTHDG 5 - GENDER EQUALITYDG 9 - INDUSTRIES, Innovation and InfrastructureDG 10 - REDUCING INEQUALITIESDG 11 - SUSTAINABLE CITIES AND COMMUNITIESDG 12 - RESPONSIBLE PRODUCTION AND CONSUMPTIONDG 13 - CLIMATE ACTIONDG 14 - UNDERWATER LIFEDG 15 - LIFE OF TERRESTRIAL ECOSYSTEMSDG 16 - PEACE, JUSTICE AND SOLID INSTITUTIONSDG 17 - PARTNERSHIP TO ACHIEVE THE GOALS.
"Today, environmental problems influence migrations. Some migrations occur when there is too much water, as in the case of rising sea levels, tsunamis and floods, or when there is not enough water. In these countries, people depend on the environment for their livelihoods."
From a migration perspective, the relationship between water and human mobility needs to be understood and addressed. This relationship is particularly evident in situations of hydrological extremes; both when water is lacking and when excess water affects living conditions. In the Americas there are cases of both scenarios and it is worth remembering them when studying the relationship between water and migration.
