scholarly journals The analysis of return on speculative trading with futures contracts of agriculture commodities in the context of the currency risk

2007 ◽  
Vol 55 (3) ◽  
pp. 133-142
Author(s):  
Oldřich Šoba
Keyword(s):  
Exchange Rate ◽  
Futures Contracts ◽  
Financial Assets ◽  
Agricultural Commodities ◽  
Currency Risk ◽  
Futures Contract ◽  
The World ◽  
Speculative Trading ◽  
Relative Change ◽  
Main Factor

The paper is focused on analysis of return on speculative operations with futures contracts from the view of participators not undertaking and undertaking the currency risk. The currency risk is determined by unexpected change of relevant exchange rate (currency denomination of futures contracts / domestic currency of participator). The paper analyses the basic factors influencing the profitability of these operations such as relative change of futures contract value, leverage incidence and relative change of relevant exchange rate. The paper is focused on futures contracts of the world most important agricultural commodities. The conclusion of the paper for participators not undertaking the currency risk is following: The relative change of futures contract is main factor for the calculation of return on speculative operation. This change is multiplied by leverage incidence finally. The conclusion of the paper for participators undertaking the currency risk is following: The relative change of relevant exchange rate is not usually relevant for the calculation of return on speculative operation. Main factor is the relative change of futures contract because this change is multiplied by leverage incidence finally but the relative change of relevant exchange rate isn’t.Neverthless the conclusions of this paper are not valid only for futures contracts of agricultural commodities but generally also for other commodity futures contracts and futures contracts where underlying assets are not commodities but for example financial assets.

EFFECTIVE CROSS HEDGING: EVIDENCE FROM PHYSICAL CRUDE PALM OIL AND ITS INTER-RELATED AGRICULTURAL FUTURES CONTRACTS

2018 ◽  
Vol 17 (2) ◽  
pp. 123
Author(s):  
Noryati Ahmad ◽  
Ahmad Danial Zainudin ◽  
Fahmi Abdul Rahim ◽  
Catherine S F Ho
Keyword(s):  
Palm Oil ◽  
Futures Contracts ◽  
Crude Palm Oil ◽  
Oil Futures ◽  
Futures Contract ◽  
Agricultural Futures ◽  
Cross Hedging ◽  
Optimal Hedge ◽  
Excessive Speculation ◽  
Chicago Board Of Trade

Since its establishment, Crude Palm Oil futures contract (FCPO) has been used to directly hedge its physical crude palm oil (CPO). However, due to the excessive speculation activities on crude palm oil futures market, it has been said to be no longer an effective hedging tool to mitigate the price risk of its underlying physical market. This triggers the need for market players to find possible alternatives to ensure that the hedging role can be executed effectively. Thus this investigation attempts to examine whether other inter-related grains and oil seed futures contracts could serve as effective cross-hedging mechanisms for the CPO. Weekly data of inter-related futures contracts from Chicago Board of Trade (CBOT) and Dalian Commodity Exchange (DCE) are employed to cross hedge the physical crude palm oil prices. The study starts from 2006 until 2016. Empirical results indicate that FCPO is still the best futures contract for hedging purposes while Chicago Soybean (CBOTBO) provides second best alternative if cross-hedging is considered. Keywords: Crude palm oil, Crude palm oil futures, Cross Hedging, Optimal Hedge Ratio, Effective Hedging

scholarly journals Wealth Rheology

Entropy ◽  
2021 ◽  
Vol 23 (7) ◽  
pp. 842
Author(s):  
Zdzislaw Burda ◽  
Malgorzata J. Krawczyk ◽  
Krzysztof Malarz ◽  
Malgorzata Snarska
Keyword(s):  
Exchange Rate ◽  
Simple Model ◽  
Real Data ◽  
Ranking List ◽  
Kendall’S Τ ◽  
The World ◽  
The Usa ◽  
Overlap Ratio ◽  
Growth Volatility ◽  
Wealth Rank

We study wealth rank correlations in a simple model of macroeconomy. To quantify rank correlations between wealth rankings at different times, we use Kendall’s τ and Spearman’s ρ, Goodman–Kruskal’s γ, and the lists’ overlap ratio. We show that the dynamics of wealth flow and the speed of reshuffling in the ranking list depend on parameters of the model controlling the wealth exchange rate and the wealth growth volatility. As an example of the rheology of wealth in real data, we analyze the lists of the richest people in Poland, Germany, the USA and the world.

Foreign Exchange Policies of PRC: Historical Aspect

2014 ◽  
pp. 24-31
Author(s):  
A. Binder ◽  
A. Kononov
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Perspective Taking ◽  
Historical Perspective ◽  
Chinese Economy ◽  
Historical Aspect ◽  
Distinctive Features ◽  
The World ◽  
Exchange Policy

The article analyzes the distinctive features of the PRC foreign exchange policy from the historical perspective, taking the national color into account and emphasizing the traditions-modernity unity in its strategy. It reviews the debates over renminbi exchange rate, disclosing the weakness of the modern international foreign exchange law. It systemizes the practices of international pressures applied to China in this aspect. It is stated, that China’s foreign exchange reforming process is of a long-term nature, and it will be completed only by the time the Chinese economy gets adjusted to the world market’s requirements.

scholarly journals Trade Agreements, Competition, and the Environment: Gridlock at the Crossroads

1994 ◽  
Vol 26 (1) ◽  
pp. 97-107 ◽  
Author(s):  
James L. Seale ◽  
Gary F. Fairchild
Keyword(s):  
International Trade ◽  
Natural Resources ◽  
World Economy ◽  
Uruguay Round ◽  
Task Force ◽  
Trade Agreements ◽  
Southern Region ◽  
Agricultural Commodities ◽  
Trade And The Environment ◽  
The World

In the 1980s, few agricultural economists, particularly from the Southern Region, published works on international trade or the globalization of the world economy. The initiation of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1986 stimulated such writings as the Southern Agriculture in a World Economy series by the Southern Region Extension International Trade Task Force (Rosson et al.). An even smaller number of agricultural economists were writing on policy linkages between trade and the environment. An early effort to remedy this situation was the Workshop on Linkages between Natural Resources and International Trade in Agricultural Commodities (Sutton).

scholarly journals HEDGING CURRENCY RISKS IN INTERNATIONAL BUSINESS USING THE OPPORTUNITIES OF THE INTERNATIONAL FOREIGN EXCHANGE MARKET

2021 ◽  
Author(s):  
Olena Liegostaieva
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
International Business ◽  
Foreign Exchange Market ◽  
Foreign Currency ◽  
Exchange Market ◽  
Currency Risk ◽  
Exchange Rate Fluctuations ◽  
Current Value ◽  
Financial Result

The article is devoted to the study of currency risk hedging in international business. The article notes that the international foreign exchange market is the largest and fastest growing of all world markets. The characteristic features of the international currency market are substantiated and offered. It is also noted that foreign exchange transactions provide economic ties between participants located on different sides of state borders: settlements between firms from different countries for the supply of goods and services, foreign investment, international tourism and business travel. It is determined that hedging of currency risks is the protection of funds from the unfavorable movement of exchange rates, and is carried out in fixing the current value of funds by concluding an agreement on the foreign exchange market. When hedging, the risk of exchange rate changes disappears, and this makes it possible to forecast the company's activities and see the financial result, which is not distorted by exchange rate fluctuations, which will allow you to determine product prices, calculate profits, etc. The main difference between hedging and other types of transactions is that its purpose is not to generate additional profits, but to reduce the risk of potential losses, as risk reduction is almost always necessary to pay, hedging, of course, involves additional costs. Hedging is a way to improve business planning. An enterprise wishing to use this service shall pledge the specified amount, from which losses on its positions will be deducted. In today's conditions, thanks to the foreign exchange market, there is a very reliable way to hedge currency risk. This method is to fix the current value of funds by concluding agreements in this market. With hedging, the company eliminates the risk of exchange rate fluctuations, and this allows you to forecast activities and see the financial result, which is not changed by exchange rate fluctuations. Allows you to pre-determine product prices, determine profits, etc. Thus, the principle of hedging in international business is to open a currency position in a foreign currency account for future transactions to convert funds.

scholarly journals Razvijeni oblik trgovine na robnim berzama - trziste robnih fjucersa -

2003 ◽  
Vol 44 (158) ◽  
pp. 7-43 ◽  
Author(s):  
Milan Eremic
Keyword(s):  
Complex System ◽  
Futures Markets ◽  
Commodity Markets ◽  
Commodity Futures ◽  
Futures Contracts ◽  
Commodity Trade ◽  
Commodity Exchange ◽  
Commodity Futures Markets ◽  
The World ◽  
The Usa

At the very beginning of this paper, we stress the fact that capitalism, during a very long period of its emergence and development, was based on simple forms of commodity trading. It is true that capital left its mark on these simple forms. However, it did not change its simple character. Several centuries were to pass in for capital to build its own autochthonous forms of commodity exchange, the forms inherent in capitalism. The early forms of commodity futures, as the basic instrument of this developed commodity exchange, are thought to have been introduced on the Chicago Board of Trade - CBOT in 1985. The introduction of commodity futures contracts into commodity exchange enabled commodity markets to be divided into physical commodity markets and contract markets. This was the beginning of a complex system of commodity trade, the emergence of new economic entities in commodity markets and the development of a very complex system of trading, settlement and trade clearing through commodity futures contracts. The construction of this new system of commodity trade has lasted more than a century and during its gradual development a tremendous construct has been created, a market structure of extraordinary internal complexity and a solid logical design. The process of creating commodity futures market in the USA was outlined only in the early 1970s. We can say that it is an almost perfectly developed system, being today a dominant system in the world. Almost 100 percent of all commodity futures markets in the world are based on the commodity futures markets in the USA. The only exception is the London Metal Exchange, which is, although not being any less perfect, essentially different from the American exchanges.

scholarly journals International Trade in Goods and Services: Aspects of Monetary and Financial Relations

2020 ◽  
Vol 19 (4) ◽  
pp. 40-49
Author(s):  
E.V. Potekhina ◽  
◽  
A.D. Efremova ◽  
Keyword(s):  
International Trade ◽  
Exchange Rate ◽  
World Economy ◽  
International Division ◽  
Goods And Services ◽  
Number Of Factors ◽  
The World ◽  
The Russian Federation ◽  
National Economies

the article examines such topical problems of the world economy as the peculiarities of interaction between the subjects of the world economy, international trade, international monetary and financial relations, the role of the exchange rate for national economies. The issues of the national economy of the Russian Federation and the degree of the country’s participation in the international division of labor and its openness are considered. In this paper, using the example of Russia, the export of goods and services is analyzed, its relationship with a number of factors (exchange rate and oil price), where the main tools are methods of statistical and econometric analysis.

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