Exchange requirements-, Financial Management

Assignment Help:

Exchange Requirements

To ensure money supply, some central banks require some or all of its foreign exchange receipts (generally from exports) be exchanged for the local currency. The rate that is used to purchase local currency may be market-based or arbitrarily fixed by the bank. This is generally applied in the countries where the currency is non-convertible or partially convertible.

The need for this tool is that the recipient of the foreign currency on conversion to local currency may easily dispose of these funds, may hold the funds with the central bank for some period or may be allowed to use these funds with certain restrictions. In simple words, the means to hold or use the foreign exchange may be otherwise limited.

Under this policy tool, money supply tends to increase when the central bank purchases the foreign currency by issuing/selling the local currency. This increase can be subsequently controlled through various issuances like selling bonds, foreign exchange interventions, etc.

Major Central Banks: Every country or a group of member states, for example European Union, shall have a central bank. Some of the major Central Banks are:

  • The US Federal Reserve
  • The Bank of England
  • The Reserve Bank of India (1935)
  • The Bank of Japan
  • The Deutsche Bundesbank
  • The Bank of Canada
  • The Reserve Bank of Australia
  • The European Central Bank.

 


Related Discussions:- Exchange requirements-

Excess of the inadequate of the working capital, Every business concern sho...

Every business concern should have neigh adequate capital to run the business operations it should have neither redundant nor excess working capital non inadequate or Shortage of

Calculate total amount of dividends in arrears, QTL Tech has an issue of pr...

QTL Tech has an issue of preferred shares outstanding with a $50 stated value that pays a dividend of 7.5%. There are 325,000 shares outstanding. QTL has not paid preferred share d

What is return oncapital employed - performance ratios, What is Performanc...

What is Performance ratios ROCE Return oncapital employed (ROCE)= (Profit before interest and tax (PBIT) / Capital employed) * 100% ROCE measures profitability and illu

Shoppers stop, how are indian customers visiting shoppers stop

how are indian customers visiting shoppers stop

Personal budget project, 15 points) You need to develop a personal budget. ...

15 points) You need to develop a personal budget. Try to be as realistic as possible. If you are going to school and not working then do some research to find out what salary you w

Analyze the corporate financial statements, You are currently an Analyst wo...

You are currently an Analyst working for a finance publication firm and as part of your responsibilities; you are required to provide a monthly forecast and analysis of certain com

Determine the factors of financial risk by giving example, Determine the fa...

Determine the factors of financial risk by giving example W. T. L. Company's cost of long-term debt two years ago was 8 percent.  This 8 percent was found to represent a 4- per

Calculate the return suitable for a share of common stock, Given that risk-...

Given that risk-averse investors demand more return for taking on much more risk while they invest, how much more return is suitable for, say, a share of common stock, than is suit

Determine about the sales agents, Determine about the Sales agents Norm...

Determine about the Sales agents Normally used for more effective sales and marketing activities for a product for example AVON (cosmetics) door to door agents in the UK. -

Types of traders in future and option markets, Types of Traders in Future a...

Types of Traders in Future and Option Markets: Hedgers Hedgers use the futures and options market principally for risk management purposes because of their exposure to pri

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd