scholarly journals Currency Futures: Some Implications For International Financial Management

2011 ◽  
Vol 3 (3) ◽  
pp. 62
Author(s):  
Russ Ray
Keyword(s):  
Interest Rate ◽  
Purchasing Power Parity ◽  
Financial Management ◽  
Capital Budgeting ◽  
Purchasing Power ◽  
Power Parity ◽  
Interest Rate Parity ◽  
Currency Futures ◽  
Efficient Hedging ◽  
Rate Parity

This paper tests the contemporary currency futures market for interest-rate parity, purchasing-power parity, market efficiency, and hedging effectiveness. The study finds that the currency futures markets is a highly efficient, hedging-effective market exhibiting significant degrees of interest-rate parity and (longer-term) purchasing-power parity. Finally, the study infers from such findings some practicable policy tools for international cash management, multi-country capital budgeting, currency forecasting, and the risk management of foreign exchange exposure.

scholarly journals Use of Deviations of Purchasing Power Parity and Interest Rate Parity to Clarify the 1997 Asian Financial Crisis

2002 ◽  
Vol 05 (02) ◽  
pp. 195-218 ◽  
Author(s):  
Mao-Wei Hung ◽  
Yin-Ching Jan
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Purchasing Power Parity ◽  
Asian Financial Crisis ◽  
Purchasing Power ◽  
Power Parity ◽  
Interest Rate Parity ◽  
Weak Evidence ◽  
Causality Tests ◽  
Rate Parity

This study is an attempt to examine whether the deviations of purchasing power parity and uncover interest rate parity Granger-cause the 1997 Asian financial crisis by using vector autoregression and Granger causality tests. The results show that the purchasing power parity and uncover interest rate parity do not hold for most Asian markets. We find weak evidence to support that the deviations of purchasing power parity and uncover interest rate parity have the power to explicate the origin of the financial crisis.

scholarly journals PENGARUH PARITAS DAYA BELI DAN PARITAS SUKU BUNGA, TERHADAP NILAI TUKAR RUPIAH TERHADAP DOLLAR AMERIKA SERIKAT

IQTISHODUNA ◽  
2018 ◽  
pp. 55-70
Author(s):  
Robiatul Adhawiyah ◽  
Maretha Ika Prajawati ◽  
Rieza Firdian
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Purchasing Power Parity ◽  
Real Interest Rate ◽  
Purchasing Power ◽  
Fisher Effect ◽  
Power Parity ◽  
Interest Rate Parity ◽  
Us Dollar ◽  
Rate Parity

The exchange rate will react against change of inflation and interest rate, at least there are three theories that explain the relationship between inflation, interest rate, and exchange rate, namely purchasing power parity, interest rate parity, and international fisher effect. The purpose of this study was to determine the influence of purchasing power parity, interest rate parity, and international fisher effect on the Rupiah exchange rate against US Dollar. The populations in this research included inflation time series data, nominal interest rate, real interest rate, and Rupiah exchange rate. The data used in is secondary data form the inflation report, nominal interest rate, real interest rate, and Rupiah exchange rate quarterly. The independent variable used purchasing power parity, interest rate parity, and international fisher effect,the dependent variable used the Rupiah exchange rate against US Dollar. The result of this study indicated that the purchasing power parity, interest rate parity simultaneously had a significant influence on the exchange rate of Rupiah/US Dollar.

scholarly journals Exchange Rate Appreciation, International Competitiveness And Purchasing Power Parity: The Shiomi Company Of Japan

2016 ◽  
Vol 12 (3) ◽  
pp. 135-144
Author(s):  
John F. Boschen
Keyword(s):  
Exchange Rate ◽  
Purchasing Power Parity ◽  
Financial Management ◽  
Nominal Exchange Rate ◽  
Purchasing Power ◽  
Power Parity ◽  
Consumer Prices ◽  
The Us ◽  
Cost Competitiveness ◽  
International Financial Management

In 2011 the ongoing appreciation in the yen against the US$ led Japanese firm Shiomi to consider relocating its production facilities outside of Japan. As a prelude to making this decision, Shiomi commissioned an evaluation of the historical impact of the yen’s appreciation on Japanese competitiveness. This evaluation is the basis for two important lessons in international financial management.  First, it is the real exchange rate, rather than the nominal exchange rate, that determines the relative cost competitiveness of countries. Second, in accordance with the rules of purchasing power parity, the historical evaluation showed that higher inflation in the U.S. relative to Japan caused the ratio of Japanese to U.S. prices to fall at roughly the same rate as the yen’s appreciation against the US$. Thus the long-term appreciation in the yen had little impact on Japanese competitiveness. Students are asked to assess the relocation decision in light of the post-case data on exchange rates and consumer prices supplied in the case. The case is appropriate for use in an international financial management or international economics course.

scholarly journals “Amoateng Gut Check” approach to forecasting exchange rate using standard parity relationships

2018 ◽  
Vol 6 (6) ◽  
pp. 01-06
Author(s):  
Kofi A. Amoateng
Keyword(s):  
Exchange Rate ◽  
Corporate Finance ◽  
Purchasing Power Parity ◽  
Historical Review ◽  
Standard Technique ◽  
Power Parity ◽  
Interest Rate Parity ◽  
Economics Students ◽  
Spot Exchange Rate ◽  
Rate Parity

This pedagogical paper demonstrates how “the Gut check approach” uses a made-simple technique for international corporate finance and economics students to forecast exchange rates using parity relationships. The “Gut-check approach” uses two simple steps. First, check out if the spot exchange rate is either direct or indirect. Second, review the parity relationships (purchasing power parity or interest rate parity) for the two currencies in question to find out which currency appreciate or depreciates. To this end, the paper provides historical review of the standard technique by many textbook authors. The “Amoateng Gut-check technique” yields similar but more precise foreign exchange rate forecasting results than the standard approach. Moreover, it provides international corporate finance and economics students who may not recognize foreign and home countries an easy way of exchange rate forecast.

The Floating Dollar in the Greenback Period: A Test of Theories of Exchange-Rate Determination

1981 ◽  
Vol 41 (3) ◽  
pp. 629-650 ◽  
Author(s):  
Lawrence H. Officer
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Foreign Exchange ◽  
Purchasing Power Parity ◽  
Foreign Exchange Market ◽  
Purchasing Power ◽  
Exchange Market ◽  
Power Parity ◽  
Exchange Rate Determination ◽  
Income Effects

Some leading modern theories of exchange-rate determination are pitted against each other in explaining fundamental movements of the freely floating U.S. dollar in the foreign-exchange market during the greenback period, 1862–1878. A purchasing-power-parity theory augmented to incorporate interest-rate, and possibly income, effects provides the best explanation of the exchange rate. The standard works on the greenback period are subject to some amendments in light of the study.

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