How is your currency financing international trade? (Essay Sample)
QUESTION 3. DUE NOV 16 How is your currency financing international trade? ( Cohen Chapter 4 and Eichengreen at al. chatper 5)
a. Please find a graph representing/showing the evolution of the trade balance of your country for the past 15 years (At least).
Make sure you understand how the value/price of your currency is relating to the import and exports of your country.
In your opinion, the trade balance in your country affected by the currency price/value?
QUESTION 4 DUE NOV 30 AT 12PM . How/what is the status of your currency as a reserve currency? (Cohen Chapter 4 & Eichengreen et al. chapter 8)
* Please check the following web page: https://data(dot)imf(dot)org/?sk=E6A5F467-C14B-4AA8-9F6D-5A09EC4E62A4
* Conclusions and Final words: DUE NOV 30 AT 12PM
Please present your thoughts on how do you think has been the handling of the currency crisis and/or war and what would you have done differently and why.
* Work Cited
This is a research paper and, in order to avoid plagiarism, please make sure you cite your sources both in-text and in the bibliography.
THE FINAL PAPER IS DUE NOV 30 AT 12PM
Currency, particularly international currency, is a form of exchange between countries. According to Siripurapu (2020) the dollar is the most important currency since World War II. As a currency, it is the most commonly held one and is used for other transactions around the world and for international trade. Since the dollar is central to the global economy, it confers benefits to the United States. This includes extending the use of U.S. financial dealings and borrowing money abroad (Siripurapu, 2020). However, some experts have argued that the supremacy of the U.S. dollar comes at a cost. Trade deficits are generated when there is an increased demand for U.S. bonds, which binds up the dollar the causes U.S. exports to be less competitive (Boyle, 2020). According to Boyle (2020), a global currency is a currency that is accepted for trade throughout the world. The most popular global currencies are the U.S. dollar, the yen, and the euro. Another way to refer to global currency is the reserve currency (Boyle, 2020).
The U.S. dollar is the most common international currency, according to the International Monetary Fund. It makes up for over 60% of all foreign exchange reserves as of 2019. That makes the U.S. dollar a de facto international currency, although the U.S. dollar does not officially hold that title (Boyle, 2020). In addition, international currencies confer benefits to the country from which it originates. As Boyle (2020) states, the U.S. dollar is the most powerful currency in the world. The U.S. had $1,671 billion circulating in the world market as of 2018. Half of that value is estimated to be circulating abroad. The dollar also rules in the foreign exchange market, with around 90% of forex trading involving the U.S. dollar (Kenen, n.d.).
Kenen (n.d.) stated that “An international currency is one that is used and held beyond the borders of the issuing country, not merely for transaction with that country’s residents, but also, and importantly, for transactions between non-residents.” Thus, an international currency is one that is used outside of the borders of the country from which it originates. As stated previously this confers benefits for the country.
Motivations For Becoming International
International currencies have a host of benefits for those countries from where it originates. This is the reason why many countries with their own currencies try become international. There are certain characteristics of international currencies that need to be taken into account. According to Pianalto (2017), three features are important for a currency to serve as an international currency: first, the currency should be extensively used in international transactions; second, it has to have ties to open and deep financial markets; third, buyers and sellers need to be confident that the currency will remain stable over time.
There are motivations for becoming an international currency. For example, the United States benefits because the majority of world currency reserves are held assets that are denominated by dollars. A part of this benefit is to borrow from other countries at an interest rate that is considered low (Pianalto, 2017). In the United States, the income that was paid to foreign companies that had U.S. assets was pegged at 4.9%. However, Americans who owned foreign assets had income paid at 6.3%. In other words, the country was able to borrow at discounted rate of 1.5% (Pianalto, 2017).
Aside from these, there are other benefits to having an international currency. One of these is the increased buying power of the currency. For example, if a person earns in U.S. dollars, ...
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