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Essay / Research Paper Abstract
A 5 page paper discussing how change in exchange rates affects a nation’s balance of payments, using the US as example. Decline in the dollar’s value eventually leads to improvement in the balance of payments, but that effect may not be immediately apparent. As is the case with virtually every other economic shift, there is a lag time between cause and effect. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: CC6_KSeconBalPay.rtf
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Unformatted sample text from the term paper:
Several years ago, Britains The Economist reported that in the late 1980s, "about $190 billion passed through the hands of currency traders in New York, London and Tokyo every day.
By 1995 daily turnover had reached almost $1.2 trillion" (Capital goes global, 1997; p. 87). Private capital movement increased at much the same rate. In 1990, about $50
billion in private capital flowing into emerging markets; by 1996 that amount had increased to $336 billion (Capital goes global, 1997). That trend slowed some after the advent of
the Asian currency crisis in 1997, but it slowly recovered to begin its inexorable growth once again. Foreign Exchange Markets The effects of
the slowdown engendered by the Asian currency crisis can be seen in the report of Cetina and Bruegger (2002), who speak to the growth of foreign exchange markets: "With
an average daily turnover in traditional global foreign exchange instruments of $1.5 trillion in April 1998, up from $1.2 trillion in 1995 and $36.4 billion in 1974, they have proved
to be the fastest-growing and most important element in the shaping of the global structure of financial markets over the past decade" (p. 905). Further, these foreign exchange instruments
represent only one segment of international financial markets. "Global financial markets are recent phenomena that embrace global capital and commodity markets, as well as foreign exchange markets" (Cetina and
Bruegger, 2002; p. 905). Effects of Currency Risk Exposure The growing and likely permanent trend toward globalization brings with it the need to
equalize business results based on widely varying changes in world currencies. In recent years, the dollar has been strong relative to other major currencies of the world, and while
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