scholarly journals Public Debt Dynamics and Intra-Year Exchange Rate Fluctuations

2020 ◽  
Vol 20 (261) ◽  
Author(s):  
Santiago Acosta Ormaechea
Keyword(s):  
Exchange Rate ◽  
Public Debt ◽  
Foreign Currency ◽  
The Public ◽  
Debt Accumulation ◽  
Exchange Rate Fluctuations ◽  
Flow Adjustment ◽  
Debt Dynamics ◽  
Adjustment Term ◽  
Stock Flow

The public sector, in carrying out its operations, often incurs foreign currency denominated liabilities and, as such, is exposed to exchange rate fluctuations that could affect the value of public debt to GDP ratios over time. This paper shows that converting foreign currency denominated flows and stocks into local currency using the average and the end-of-period exchange rates, respectively, as envisaged in public finance manuals, gives rise to an identifiable stock-flow adjustment term—due to intra-year exchange rate fluctuations—that affects public debt accumulation. Importantly, the inclusion of this often-ignored stock-flow adjustment term is critical to accurately project public debt levels and any related indicator that could in turn inform about the risk of debt distress. Using a novel dataset covering 82 countries during 2008–19, the paper shows that this stock flow adjustment term is sizable in countries experiencing large exchange rate depreciations, namely above the 99th percentile of the full sample, reaching 1.2 percent of GDP. Interestingly, the measurement of policy-related concepts such as interest rate-growth differentials and debt stabilizing primary balances are also affected by intra-year exchange rate fluctuations, and in non-negligible ways.

scholarly journals Effect of Exchange Rate Risk in the Market Value of Banks Stocks

2017 ◽  
Vol 1 (3) ◽  
pp. 145-178
Author(s):  
Hisham Talaat Abdel Hakim ◽  
Shakir Mohsin Saber Alwahili
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Market Value ◽  
Exchange Rate Risk ◽  
Correlation Relationship ◽  
The Public ◽  
Currency Exchange ◽  
Exchange Rate Fluctuations ◽  
Currency Exchange Rates ◽  
Rate Risk

     The research aims to study the nature of relationship between the risks of fluctuations in currency exchange rates and fluctuation in the market value of banks stocks of the research sample, In order to prove the hypothesis two indicators were chosen,the indices of exchange rate risk and the market value of common stocks were selected , period of (42) months ,extending from January (2014) until June (2017), was chosen, The research reached anumber of conclusion, but the most important is that the existence of correlation relationship and the affect of statistical significane pevails between the risks of exchange rate fluctuations and the market value of banks stock the sample of the study, Finally, the research recommends that the Iraqi banking departments work to diversify their banking services to the public and not only to their revenues derived from the sale of foreign currency only.

scholarly journals The Public Debt of Ukraine and the Budget Expenditure for Its Service

2018 ◽  
Vol 80 (1) ◽  
pp. 30-39 ◽  
Author(s):  
T. H. Bondaruk ◽  
O. S. Bondaruk ◽  
N. Yu. Melnychuk
Keyword(s):  
Public Debt ◽  
Debt Management ◽  
Public Budget ◽  
Sharp Drop ◽  
The Public ◽  
Debt Burden ◽  
Debt Dynamics ◽  
External Sources ◽  
Public Debt Management ◽  
Made In

the public debt is deepened, the visions of the public debt as a phenomenon burdening the national economy, found in various schools of economics, are reviewed. It is demonstrated that the high internal and external dept in parallel with the respectively growing expenditure for its service is a pressing problem for Ukraine, calling for an urgent solution. This raises the need for seeking ways to improve the public debt management mechanisms. The article’s objective is to deepen the theoretical and methodological framework for assessment of the public debt in Ukraine and the budget expenditures for its service. It is demonstrated that the public debt in Ukraine results from the public budget deficit, high sovereign borrowing from internal and external sources. The econometric assessment of the time series on budget expenditures for debt service and repayment in Ukraine is given. The analysis of the public debt dynamics in Ukraine shows that not only the increasing volume of public debt and State-guarantee debt, but also the increasing budget expenditures on its service and repayment are dangerous. The high deficit of public budget is persisting, which growth is caused, inter alia, by the payment commitments. The expenditures on service and repayment of public debt constitute a large share in the public budget expenditures. Forecasting calculations made in the article demonstrate the upward tendency in the public budget expenditures on repayment and service of the public debt of Ukraine, thus signaling the growing threats to the budget security of Ukraine. The main factors for the rapidly increased debt burden in Ukraine over the latest years are identified: the considerable devaluation of domestic currency (Hryvnya), sharp drop in GDP, the shrinking internal consumer demand, etc.    It is demonstrated that the risk of the increasing payments for service of public debt is an essential and chronic factor generating problems in public finances and affecting the budget security of Ukraine.  

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 The public debt of the Republic of Serbia: The current situation and perspectives

2005 ◽  
Vol 50 (164) ◽  
pp. 119-134
Author(s):  
Marinko Bosnjak
Keyword(s):  
Public Debt ◽  
Foreign Currency ◽  
External Debt ◽  
Economic Policies ◽  
The Public ◽  
Use Of Resources ◽  
Growth Stability ◽  
Ministry Of Finance ◽  
Time Periods ◽  
The Republic

The paper deals with the internal and external debt situation of the Republic of Serbia based on the data relating to 2000 and 2004, issued by the Ministry of Finance, as well as the basic macroeconomic assumptions for the regular servicing of debts. The general results of this research indicate that the key institutional assumptions for the strengthening of annuity payment ability are consistent reforms and economic policies, and the key economic assumptions for debt repayment are economics growth, stability and reduction in the volume and changing the structure of government consumption. Investment and export growth which provides for growth in gross domestic product and income in foreign currency, which should be sufficient for debts repayment in the next five years, expressed in time periods as well as annuity payments per year, are the key significance for servicing of debts. Increase in economy efficiency, as well as the efficient use of resources obtained by credit facilities, are guaranties of maintaining the balance between volume and repayment capabilities of debts.

scholarly journals Public debt of Ukraine and its influence on main socio-economic indicators

2020 ◽  
pp. 5-10
Author(s):  
Sergii Stepanenko
Keyword(s):  
Economic Development ◽  
Public Debt ◽  
The State ◽  
Debt Management ◽  
Economic Indicators ◽  
The Public ◽  
Goods And Services ◽  
Socio Economic Development ◽  
Debt Dynamics ◽  
Public Debt Management

Introduction. Solving the problem of public debt management is one of the key factors of economic stability in the country. The budget capacity of the state and the stability of its national currency largely depend on the nature of the debt problem settlement. The need to address these issues requires finding ways to improve the mechanism of public debt management and servicing in Ukraine. The purpose of the article is to study the public debt dynamics of Ukraine and model the nature of its impact on key socio-economic indicators in modern conditions. Results. The dynamics and structure of the state and state-guaranteed debt of Ukraine for the period 2013-2019 are analyzed. The negative dynamics of the growth of the total amount of debt during 2014-2018 is determined. In 2019, the total amount of debt in hryvnia decreased due to the reduction of external and guaranteed debt, but in dollar terms increased, which threatens the financial stability of the country. Using the software product EViews 10 based on the Granger causality test, the system of causal relationships between the dynamics of public debt (index) and indicators of socio-economic development: GDP growth rate, industrial production index, real income index, employment index, the index of exports of goods and services, the index of imports of goods and services has been researched. On the basis of the established causal relations the autoregressive influence models of the public debt dynamics on indicators of social and economic development are constructed, on which the error does not exceed 5%. Conclusions. According to the results of the constructed models, the negative impact of public debt on the main socio-economic indicators is determined, which is confirmed by the negative values of the elasticity indexes of socio-economic indicators. The built models serve as a preventive tool of public debt management, with the help of which it is possible to promptly respond to threats to socio-economic development by monitoring the level of public debt dynamics. Key words: public debt, public debt management, socio-economic development, financial security of the state.

scholarly journals Stock-Flow Adjustment – Only a Residual Value? Evidence from European Union Countries

e-Finanse ◽  
2019 ◽  
Vol 15 (3) ◽  
pp. 10-20
Author(s):  
Monika Banaszewska
Keyword(s):  
European Union ◽  
Public Debt ◽  
Budget Deficit ◽  
Fiscal Sustainability ◽  
The European Union ◽  
Fiscal Transparency ◽  
Flow Adjustment ◽  
European Union Countries ◽  
Stock Flow ◽  
The Empirical Analysis

AbstractThe aim of the article is to investigate the fiscal determinants of stock-flow adjustment (SFA). Previous literature suggests that SFA may be used strategically to reduce budget deficit and public debt. As such, SFA impairs fiscal transparency and may endanger fiscal sustainability. Therefore, special attention should be paid by economists and policymakers. The study pertains to the European Union countries in the years 2005-2016. The empirical analysis supports the hypothesis that SFA is inversely related to public debt, whereas the inverse relationship between budget balance and SFA is not confirmed. The article contains additional analyses for selected components of SFA as well as narrower time and space coverage.

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