ANALYSIS OF THE ASIAN CRISIS: Difference between revisions
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*Participants of the foreign exchange market are: | *Participants of the foreign exchange market are: | ||
#Commercial banks and other depository institutions: transactions involve buying/selling of bank deposits in different currencies for investment. | #Commercial banks and other depository institutions: transactions involve buying/selling of bank deposits in different currencies for investment. | ||
#Non-bank financial institutions (pension funds, insurance funds) may buy/sellforeign assets. | |||
#Private firms: conduct foreign currency transactions to buy/sell goods, assets or services. | |||
#Central banks: conduct official international reserves transactions. | |||
==CAUSES OF THE ASIAN CRISIS== | ==CAUSES OF THE ASIAN CRISIS== | ||
Revision as of 23:03, 9 April 2006
INTRODUCTION
- An analysis of the East Asian crisis.
OVERVIEW OF EXCHANGE RATES
- Exchange rates are quoted as foreign currency per unit of domestic currency or domestic currency per unit of foreign currency.
- Exchange rate allows us to denominate the cost or price of a good or service in a common currency.
- Depreciation is a decrease in the value of a currency relative to another currency.
- Appreciation is an increase in the value of a currency relative to another currency.
THE FOREIGN EXCHANGE MARKET
- It is the financial market where exchange rates are determined.
- Participants of the foreign exchange market are:
- Commercial banks and other depository institutions: transactions involve buying/selling of bank deposits in different currencies for investment.
- Non-bank financial institutions (pension funds, insurance funds) may buy/sellforeign assets.
- Private firms: conduct foreign currency transactions to buy/sell goods, assets or services.
- Central banks: conduct official international reserves transactions.
