Bank Foreign Currency Hedging and the Impact on Covered Interest Parity, an Emerging Market Perspective

2019 ◽  
Author(s):  
Georgia R. Bush
Keyword(s):  
Foreign Currency ◽  
Emerging Market ◽  
Currency Hedging ◽  
Covered Interest Parity ◽  
Interest Parity ◽  
The Impact ◽  
Market Perspective

scholarly journals Covered Interest Parity Deviations Between India And The US

2011 ◽  
Vol 11 (1) ◽  
pp. 83 ◽  
Author(s):  
Vadhindran K. Rao
Keyword(s):  
Forecast Error ◽  
Error Variance ◽  
The United States ◽  
Country Risk ◽  
Forward Premium ◽  
Permanent Shocks ◽  
Forecast Error Variance ◽  
Covered Interest Parity ◽  
Interest Parity ◽  
The Impact

Prior studies have tested Covered Interest Parity (CIP) between India and the United States and found substantial deviations. The main objective of the current study is to econometrically model and explain deviations from CIP. Further, the study contributes to the literature by proposing an approach to testing CIP after allowing for country risk. A preliminary analysis suggests that there are two types of shocks that impact the CIP deviation, also referred to as the Covered Interest Differential (CID): permanent shocks and temporary shocks. The permanent shocks may be interpreted as reflecting a change in the country risk premium and the temporary shocks as reflecting transient effects and disequilibrium. The paper uses a bivariate Vector Autoregression (VAR) approach to model the joint dynamics of the CID and the forward premium, and applies the methodology of Blanchard and Quah (1989) to separate the impact of the two types of shocks. Impulse-Response analysis shows that a one standard deviation permanent shock has an immediate, substantial impact on the CID. However, forecast error variance decomposition reveals that less than 30% of the variability in the CID is caused by such permanent shocks. Further, permanent shocks account for less than 5% of the forecast error variance of the forward premium, which suggests that covered interest arbitrage activity has limited influence on the forward premium. Temporary shocks appear to be related to transient volatility in the forward premium, and such shocks initially affect both the forward premium and the CID to approximately the same extent. The manner in which the CID responds to a temporary shock suggests considerable impediments to arbitrage. However, the fact that the CID recovers at a slightly faster rate than the forward premium, especially in the initial periods, suggests that capital restrictions are not completely binding.

Drivers of service climate: an emerging market perspective

2018 ◽  
Vol 32 (4) ◽  
pp. 476-492 ◽  
Author(s):  
Hung Trong Hoang ◽  
Sally Rao Hill ◽  
Vinh Nhat Lu ◽  
Susan Freeman
Keyword(s):  
Emerging Market ◽  
External Factors ◽  
Equation Modeling ◽  
Service Firms ◽  
Service Climate ◽  
Content Type ◽  
The Impact ◽  
Market Perspective ◽  
Ownership Types ◽  
Internal Drivers

PurposeDrawing on social exchange theory, the purpose of this paper is to develop and test an integrative model of internal and external factors determining employee perceptions of their organizational service climate.Design/methodology/approachData are collected from a sample of 549 service employees in local and foreign-owned service firms in the emerging market of Vietnam. Structural equation modeling is used to test the hypothesized relationships.FindingsLeadership commitment to service quality, internal processes and service standards, work facilitation resources and service-oriented human resource practices are positively associated with service climate. Internal customer service mediates the effects of these variables on service climate, with the exception of work facilitation resources. Furthermore, competitive intensity negatively moderates the impact of the internal drivers on service climate. The results also suggest that, depending on the ownership types (local vs foreign firms), the influences of the internal drivers of service climate might differ.Originality/valueDespite the recognition of the role of organizational resources in fostering service climate, the integration and processes by which such resources influence service climate have not been fully examined. In particular, little is known about the external factors facilitating or hindering service climate, especially from an emerging market perspective. By examining both internal and external drivers of service climate under different ownership types, this paper enriches the existing knowledge on service climate and provides important implications for service firms operating in emerging markets.

Exchange rate realignments and risks of deflation in North America

2008 ◽  
Vol 206 ◽  
pp. 83-86
Author(s):  
Dawn Holland ◽  
Ray Barrell ◽  
Tatiana Fic ◽  
Sylvia Gottschalk ◽  
Ian Hurst ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Latin American ◽  
Foreign Currency ◽  
Emerging Market ◽  
Currency Markets ◽  
Global Recession ◽  
The Us ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

The US dollar has strengthened in recent months against most major currencies, with the exception of the yen. It has also gained strength against emerging market currencies, and the US effective exchange rate has appreciated by just over 7 per cent in the past three months. Emerging market declines have been exacerbated in recent weeks by the turbulence on financial markets that has forced stock markets to interrupt trading on several occasions. Figure 13 shows effective exchange rates for the US, Canada, Mexico and Brazil. Central banks in Mexico and Brazil have intervened in currency markets in recent weeks to stem the decline of their currencies, which have dropped against the dollar by nearly 20 per cent in the case of Mexico and 40 per cent in Brazil since the beginning of September. If stock market trading stabilises, much of these losses should prove temporary. Our forecast assumes that a depreciation of 10 per cent in effective terms in the Brazilian real and 5 per cent in the Mexican peso is sustained. While this raises the inflationary outlook for these economies, gains in competitiveness will help moderate the impact of the global recession on Latin American economies. However, a more sustained depreciation will put the banking systems in these countries at risk as it becomes increasingly difficult to service debt in foreign currency.

scholarly journals EXPORT ACTIVITIES IN THE PANDEMIC CONDITIONS

2021 ◽  
Author(s):  
Oksana Piankova ◽  
Olha Churikova
Keyword(s):  
Agricultural Sector ◽  
Foreign Currency ◽  
Developing Economies ◽  
Health Care Systems ◽  
Emerging Market ◽  
Active Phase ◽  
The State ◽  
Transport Services ◽  
The World ◽  
The Impact

The article highlights the relevance of the study of export activities of domestic enterprises in a crisis; the dynamics of export-import operations during the pandemic is studied; the export-oriented industries with the most devastating effects of the COVID-19 pandemic have been identified; the contribution of the enterprises of the mining and metallurgical complex, light, chemical branches to the volumes of commodity exports of Ukraine is considered; the impact of the crisis on the volume and structure of exports of transport services is determined, the issues are updated and the prospects for overcoming the consequences of the crisis by exporters are outlined. The coronavirus pandemic has reached almost every country in the world. Its spread has left national economies and businesses counting the costs, as governments struggle with new lockdown measures to tackle the spread of the virus. The crisis highlights the need for urgent action to cushion the pandemic’s health and economic consequences, protect vulnerable populations, and set the stage for a lasting recovery [8]. Emerging market and developing economies will be buffeted by economic headwinds from multiple quarters: pressure on weak health care systems, loss of trade and tourism, dwindling remittances, subdued capital flows, and tight financial conditions amid mounting debt. Exporters will be particularly hard hit. The article highlights the changes in the state of export activity caused by the pandemic. According to Moody’s Analytics [12] , the coronavirus pandemic could become the "black swan" of 2020, which will have a more significant impact on the world economy than the financial crisis of 2008-2009. Export is one of the most important side of the development of any country. The relevance of the chosen topic is related to the export orientation of domestic producers. Ukrainian export accounts over 30% of Ukraine’s GDP. Export is one of the most important sources of filling the state budget, as well as inflow of foreign currency. However, with the beginning of the active phase of the COVID-19 pandemic on March 25, we may see a sharp decline of export of certain commodity items and into some countries. It is stated that the GDP pf Ukraine can decline in 4-8% in comparison with 2019. The indicators of the decline of export in main industries were identified and analyzed in the article, and ways to solve this problem have been provided [2]. At this point, none of the top-15 trade partner of Ukraine in export has not changed its trade policy, although export to some counties has been reduced considerably. Restrictions, imposed as a part of fight against the pandemic, create additional difficulties for producers. Regulations in the agricultural sector are sophisticated and they lead to the additional losses in business. Uninterruptible performance of the cargo transportation is essential for proper job of the agricultural sector and the manufacturing. As a result of the pandemic supply chains are ruining, the access of the producers to the markets is going to be lost, and the demand for goods is decreasing.

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