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Topic: Floating currency


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  Floating exchange rate - Wikipedia, the free encyclopedia
A floating exchange rate or a flexible exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market.
A currency that uses a floating exchange rate is known as a floating currency.
There is no currency in the world whose value is absolutely and entirely determined by the foreign exchange market; in cases of extreme appreciation or depreciation, a central bank will normally intervene to stabilize the currency.
en.wikipedia.org /wiki/Floating_exchange_rate   (328 words)

  
 News Release: New Currency Regime of "Managed Floating Plus" Recommended for Larger Emerging Economies   (Site not responding. Last check: 2007-11-02)
Currency boards and dollarization solve some problems but are impotent in dealing with Argentina-type crises characterized by recession, an overvalued real exchange rate, limited flexibility of domestic costs and prices, and too much public debt to permit countercyclical fiscal policy.
And plain-vanilla floating has limited appeal to many emerging economies because of their balance-sheet vulnerability to large exchange rate changes and because of their dissatisfaction with monetary targeting as a nominal anchor.
It would give them a deterrent to currency mismatching and to balance-sheet vulnerability, a much reduced fear of floating, enough monetary independence to engage in gross tuning of monetary policy to counter recessions, sufficient "flex" in the exchange rate to deal with large shifts of private capital flows, and workable nominal anchor.
www.iie.com /publications/newsreleases/managedfloatingplus.htm   (1220 words)

  
 Foreign Currency - InterEcon
Currency is like any other commodity in existence in the world: there is a certain supply and a certain demand of each type.
Sometimes, however, a currency is not its own commodity, but rather, a representation for a small supply of another (as stated earlier, the United States used to back the dollar with the gold standard).
The first of these is the floating currency model which, as the name suggests, adjusts frequently to account for subtle changes in a nation’s economic wellbeing.
library.thinkquest.org /03oct/01302/en_txt/global_econ_forex.html   (1024 words)

  
 Supply-Side Sabbatical #3: Fixed Rates Over Floating; 06-22-01
It was not until the spring of 1973 that Treasury Secretary George Shultz, a disciple of Milton Friedman and floating exchange rates, officially decreed the float to be permanent.
When central banks are not required by agreement to intervene in order to support a "weak" currency, the country whose currency is weak is forced to accept the consequences of the easy-money policies that made the currency weak.
Floating advocates say this is desirable, that it exerts an internal discipline on each monetary authority to act responsibly.
www.polyconomics.com /searchbase/06-22-01.html   (2337 words)

  
 Understanding the language of Foreign Currency Trading
The intervention of central banks in currency exchange rates results in a "dirty float." Rates of exchange on currencies can be truly floating, fixed, or a hybrid of the two.
Non-floating-rate currencies are controlled strictly by their respective governments and therefore are not as accessible for trade or as efficient in their pricing.
Currency futures prices are very similar to forward prices except that futures contracts are standardized in size, quote mechanism, and settlement dates, and they are executed on a regulated exchange by open outcry.
www.clarku.edu /faculty/mcallan/Econ308/Readings/FX_trading.htm   (2927 words)

  
 Currency Swap
A currency swap is a form of swap.
A currency swap is exactly the same thing except, with an interest rate swap, the cash flow streams are in the same currency.
Vanilla currency swaps are quoted both for fixed-floating and floating-floating (basis swap) structures.
www.contingencyanalysis.com /glossary/articles/currency_swap.htm   (572 words)

  
 AEI - Events
China is the classic case of an undervalued currency, with money flowing into the country and no way to sterilize it leading to a "bubble" syndrome that could soon burst.
Floating the currency would be a way to start dealing with the insolvency of the banking system.
The currency will eventually appreciate no matter what approach is taken, and the focus needs to be on the transition period, in particular in the banking industry.
www.aei.org /events/filter.social,eventID.635/summary.asp   (1689 words)

  
 Currency Swaps
A currency swap involves the exchange of loan in one currency for a loan in another currency and both principal and interest payments are exchanged.
These are fixed to fixed swaps and fixed (floating) to floating swaps which sometimes called as circus swaps or currency coupon swaps.
The counterparties to a “fixed-to-fixed currency swap” may wish to enter the swap because of each one’s comparative advantage which may be in either direction.
www.angelfire.com /ca/finrisk/Curswap.html   (710 words)

  
 Currency risk   (Site not responding. Last check: 2007-11-02)
Currency risk represents the risk of loss associated with an unfavorable exchange rate move for the company.
Current currency risk is the risk of a floating currency rate change.
Currency risk of the given portfolio must be quantitatively evaluated for 10 days (i.e.
www.finflowholdings.com /ffh/currency_risk.shtml   (818 words)

  
 Floating currency - Wikipedia, the free encyclopedia
A floating currency is a currency that uses a floating exchange rate as its exchange rate regime.
A floating currency is contrasted with a fixed currency.
In the modern world, the majority of the world's currencies are floating, including the most widely traded currencies: the United States dollar, the Japanese yen, the euro, the British pound and the Australian dollar.
en.wikipedia.org /wiki/Floating_currency   (181 words)

  
 Floating And Fixed Exchange Rates
In a floating regime, the central bank may also intervene when it is necessary to ensure stability and to avoid inflation; however, it is less often that the central bank of a floating regime will interfere.
Currencies were linked to gold, meaning that the value of a local currency was fixed at a set exchange rate to gold ounces.
In Thailand, the government eventually had to allow the currency to float, and by the end of 1997, the bhat had lost its value by 50% as the market's demand and supply readjusted the value of the local currency.
www.investopedia.com /articles/03/020603.asp   (1543 words)

  
 FASB: Transition Provisions: Floating-Rate Currency Swaps
For a compound derivative that has a foreign currency exchange risk component (such as a foreign currency interest rate swap), an entity is permitted at the date of initial application to separate the compound derivative into two parts: the foreign currency derivative and the remaining derivative.
As discussed in paragraphs 523 and 524 of the basis for conclusions, footnote 13 to paragraph 49 permits bifurcation of a compound derivative with a foreign currency exchange risk component upon initial application of Statement 133.
A swap that has two floating legs is a compound derivative, and therefore is subject to those transition provisions, because the cash flows that arise under that type of contract are based on multiple underlyings-interest rates in the relevant currencies and the foreign currency exchange rate.
www.fasb.org /derivatives/issuej5.shtml   (585 words)

  
 Dinar Currency Peg
The proposal is for a country to peg its currency to the export commodity.
ster a floating currency, but this is typically a very unusual occurrence.
A currency board is not a central bank.
www.dinar-into-dollars.com /dinar_currency_peg.html   (2548 words)

  
 Economist.com
A floating currency allows a country to adjust to external shocks through the exchange rate.
A floating currency will force firms and investors to hedge against fluctuations, not lull them into a false sense of stability (as they were in most of Asia).
Whether regional currency unions are co-operative (as in Europe) or hegemonic (as they would most likely be in the Americas), they raise tough questions of sovereignty and regulation.
mit.edu /14.02/www/S03/Economist_fixorfloat.htm   (1764 words)

  
 Howstuffworks "How Exchange Rates Work"
Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.
If a sudden demand for a currency were to drive up the exchange rate, the national bank would have to release enough of that currency into the market to meet the demand.
The original seed for a common currency was planted in 1946 when Winston Churchill suggested the creation of the "United States of Europe." His goals were primarily political, in that he hoped a unified government would bring about peace for a continent that had been torn apart by two world wars.
money.howstuffworks.com /exchange-rate.htm/printable   (1533 words)

  
 News Release: Currency Mismatches at Center of Financial Crises in Emerging Economies   (Site not responding. Last check: 2007-11-02)
Currency mismatches can also constrain the scope for interest rate cuts during a crisis and can contribute to a “fear of floating” in the conduct of exchange rate policy.
A good measure of currency mismatch has to consider the asset as well as the liability side of the balance sheet, along with the potential response of noninterest flows (like exports) to a change in the exchange rate.
Domestic bond markets in developing countries tend to be denominated mainly in domestic currency and they have become the largest single source of financing—larger (in flow terms) than domestic bank loans and much larger than international bonds.
www.iie.com /publications/newsreleases/currencymismatching.htm   (867 words)

  
 The International Financial Architecture   (Site not responding. Last check: 2007-11-02)
Proclaiming a currency board does not, as is sometimes asserted, automatically guarantee the credibility of a fixed-rate peg (see Figure 1); a currency board is not credibility in a bottle.
Contrary to claims that currencies in Mexico, Thailand, Indonesia, Korea, Russia, or Brazil were formally pegged to the dollar when their recent crises hit, they actually were following varieties of bands, baskets, and crawling pegs (See Figure 1 for definitions).
While the dollar and the euro will be the two important international currencies in the coming decade, forecasts that most countries in the Western Hemisphere may or should give up their currencies in favor of the dollar, or those in the Eastern Hemisphere in favor of the euro or some other currency, are greatly exaggerated.
www.brookings.edu /comm/policybriefs/pb51.htm   (2825 words)

  
 FASB: Transition Provisions: Fixed-Rate Currency Swaps
By analogy, it is suggested that, upon initial application of Statement 133, a currency swap that has two fixed legs could be separated into three derivative components: a currency swap that has two floating-rate legs and two interest rate swaps (one in each currency).
Unlike a currency swap that has two floating legs,, a currency swap that has two fixed legs is not a compound derivative as that term is used in footnote 13.
For a currency swap with two fixed legs, changes in interest rates do not directly impact the cash flows under the contract because the interest rates that determine the amount of each currency that is payable are fixed at the inception of the contract.
www.fasb.org /derivatives/issuej6.shtml   (372 words)

  
 Floating currency regime puzzle Fischer praises Turkey's progress, rules out change to free float - Turkish Daily News ...
The floating currency regime which went into effect on May 14 with the implementation of the economic program has become one of the most controversial issues in Turkey.
The floating currency regime would act as a warning by absorbing political jockeying come inconfidence and reflecting it as higher interest and foreign exchange rate.
In Istanbul Fischer heard recently heated debates on the pros and cons of the free floating exchange rate system, which Turkey was forced to adopt in late February as a pegged exchange rate collapsed amid a financial crisis.
www.turkishdailynews.com.tr /archives.php?id=24369   (1923 words)

  
 Beijing's Bombshell: Brace for a Floating Currency
''Floating the yuan is in the cards,'' says one of the execs present at the meeting.
A currency float would mean that policymakers won't be caught by an out-of-whack exchange rate.
Although the central bank, the People's Bank of China, refuses to confirm any change, Zhu's comments are a signal to the market in an effort to soften the inevitable disruptions that will accompany any move toward a flexible exchange rate.
www.businessweek.com /@@yG@spIQAL6dmPgAA/2000/00_28/b3689155.htm   (767 words)

  
 Traders Exchange Forex
USD/HKD is a managed floating currency at a rate of around 7.8 HKD per USD.
There is much speculation about the possibilities of free floating this currency which will most likely coincide with and be linked to the progress and reforms of the CNY.
Until May 2001, the forint, HUF, was the most restricted currency in the region, managed by a crawling peg against the EUR, with.3 percent devaluation per month within a band of +/- 2.25 percent from the central parity.
www.tradersexchange.com /resources/currencyguide.html   (1309 words)

  
 A Crude Peg for the Iraqi Dinar: Jeffrey Frankel
The choice of currency regime - particularly what to anchor the currency to -is perhaps the most widely studied topic in international monetary economics.
One big drawback of a fixed exchange rate is that it means giving up the automatic depreciation that a floating currency would experience at times when the world market for the country's exports were weak.
Argentina's currency board collapsed two years ago, not just because the straitjacket was so rigid but also because the rigid link was to a currency, the dollar, that had appreciated strongly against the euro and other trading partner currencies during the second half of the 1990s.
www.ksg.harvard.edu /news/opeds/2003/frankel_dinar_ft_061303.htm   (841 words)

  
 [No title]   (Site not responding. Last check: 2007-11-02)
The currency risk of the bank arising due to fluctuations of the currency exchange rate determines the possibility of loss caused by the fact that the exchange rate of one currency to the other will change.
At the other end of the spectrum lies the "Floating Rate" regime, where the exchange rate is determined by trading of the currency in the currency market.
The Euro, for instance, is a "floating" currency, as is the Swiss Franc, Sterling Pound, Japanese Yen, Australian Dollar and many others.
www.lycos.com /info/currency-exchange-rate.html   (322 words)

  
 China’s RMB Revaluation: Not Now and Not Soon
Mainland authorities are certain to have kept a close eye on the demise of the Paper Tigers, whose currencies crashed into oblivion after their flimsy capital accounts - brought on by the era of free floating enthusiasm – were sucked dry by international investors gone helter-skelter amidst bubble fears.
On the assumption that the RMB would appreciate upon floating – reinforced by a hefty trade surplus and mountains of foreign direct investment – Japan is hoping that China relaxes its grip as soon as possible.
On the currency policy issue, China is stuck between a rock and a hard spot – for whichever way it moves, or doesn’t move – the country is up against criticism.
www.friedlnet.com /news/03011002.html   (967 words)

  
 Al-Ahram Weekly | Economy | Floating the pound   (Site not responding. Last check: 2007-11-02)
Banks will decide the buy and sell rates of foreign currencies on a daily basis, announcing their rates throughout the day and regularly informing the CBE of the size and value of their transactions.
She is optimistic that this will allow hard currency to flow back into the banking system rather than the fl market.
With a free floating currency, there has to be the institutional capacity to manage that float.
weekly.ahram.org.eg /2003/623/ec1.htm   (1108 words)

  
 Floating Point Currency
Refers to the use of floating-point types (float or double in CeeLanguage/CeePlusPlus/JavaLanguage/etc.) to store currency values, especially whenever the IeeeSevenFiftyFour floating point standard is used.
They are less efficient than floating point because the calculations are done in base 10 instead of the base 2 that machines prefer.
About once or twice a year I encounter problems with floating point in calculating currency or business rates, and require ugly code to work around it.
c2.com /cgi/wiki?FloatingPointCurrency   (835 words)

  
 U. Washington, Geography 349: currency markets
currency swap: an agreement to exchange a set amount of currency immediately at the spot rate and to reverse the exchange at a set rate at a set, future, date.
This is the case even if the importer pays with the importer's currency or a "third" currency, because the factors of production in the exporting country must be paid in their currency.
Analogously, an import creates additional supply of the currency of the importing country, because at some point along the line, import country's currency is being exchanged for export country's currency.
faculty.washington.edu /jwh/349lec09.htm   (1285 words)

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