Question
In: Accounting
Why does most interbank currency trading worldwide involve the U.S. dollar? Explain in detail and provide...
Why does most interbank currency trading worldwide involve the U.S. dollar? Explain in detail and provide an example. How have the current financial problems in the U.S. affected interbank trading, if any?
Solutions
Expert Solution
Foreign exchange refers to the place in the market where trading of international currencies takes place.
Foreign exchange is the largest market place for the trading of currencies in the world where buying and selling of currencies takes place.
Trading in currencies worldwide is against a common currency that has international appeal.Trading would be exceedingly cumbersome and difficult to manage if each trader made a market against all other currencies.So most interbank currency trafing worldwide involve US Dollars.
Over the short term, the financial crisis affected the banking sector by causing banks to lose money on mortgage defaults, interbank lending to freeze, and credit to consumers and businesses to dry up.
ekkarill92 answered 2 years agoRelated Solutions
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In the following table, provide exchange rates between The Netherlands currency and the U.S. dollar (US$)....
In the following table, provide exchange rates between
The Netherlands currency and the U.S. dollar (US$). Please
use indirect quote (for example: US$1 = CF900). This information
can be found through internet data research.
Table 1. Netherlands’ exchange rates*
Years
Exchange rates
% change
2008
N/A
2009
2010
2011
2012
2013
2014
2015
2016
2017
* Provide the exchange rates for the last business day of
each year
In five to seven sentences, discuss what the data tells...
If the NZ dollar (base currency) is trading at a discount in the forward market relative...
If the NZ dollar (base currency) is trading at a discount in the
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Select one:
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b. then for NZ dollars in terms of UK pounds, the forward rates
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If the forward exchange rate of the yen in terms of the New
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Gotohell buys and sells regularly with customers worldwide. Its home currency is the dollar. The firm...
Gotohell buys and sells regularly with customers worldwide. Its
home currency is the dollar. The firm expects to receive €1.2
million in 6 months’ time from a customer abroad.
Current exchange rates in the home country of Gotohell are:
Exchange rate : Euros Per dollar
Spot : 4.1780-4.2080
6-month forward : 4.2302- 4.2606
12-month forward : 4.2825-4.3132
Required: a) Calculate the rate of forward discount of the euro
on the 6-month forward exchange rate both for buying and selling
rate....
Gotohell buys and sells regularly with customers worldwide. Its home currency is the dollar. The firm...
Gotohell buys and sells regularly with customers worldwide. Its
home currency is the dollar. The firm expects to receive €1.2
million in 6 months’ time from a customer abroad.
Current exchange rates in the home country of Gotohell are:
Exchange rate : Euros Per dollar
Spot : 4.1780-4.2080
6-month forward : 4.2302- 4.2606
12-month forward : 4.2825-4.3132
Required:
a) Calculate the rate of forward discount of the euro on the
6-month forward exchange rate both for buying and selling rate....
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a. Explain how Saudi Arabia would fix the value of the Riyal
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What impact did the U.S. presidential election have on the U.S. dollar and the currency markets/exchange...
What impact did the U.S. presidential election have on the U.S.
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