Comments on: Foreign Exchange Markets: Devaluation and Revaluation

By: barry econ

barry econ — Thu, 17 Jul 2008 22:40:36 +0000

Technically you should be able to buy more. If you are paid in riyals then your riyals will buy more dollars if the country revaluates. You see, China won't revaluate because their goods will become more expensive and thus exports will decrease slowing the economy.

By: Jojo

Jojo — Thu, 17 Jul 2008 05:02:12 +0000

The explanations are very clear and understandable. But I could not figure out what is the economic impact of revaluation to the people especially those working abroad. There is something missing that I am looking for. In revaluation, example: If an expatriate income is in riyals that used to be 3.75 against 1 dollar, if it is revalued by 20% what would be the exchange rate against 1 dollar? Is it beneficial or a disadvantage to an expatriate worker?

By: barry econ

barry econ — Thu, 10 Jan 2008 23:31:07 +0000

Sounds to me you just loose twice; although, I'm not much of a bond guy so I could be wrong. If both currencies depreciate by the same value you don't loose at all. But if they keep depreciating eventually you loose purchasing power.

By: Bob Mathews

Bob Mathews — Mon, 07 Jan 2008 23:01:42 +0000

I own an portfolio of european and emerging mkt bonds. If the currencies which hold these bonds goes down in value in relationship to the US Dollar, the value of their interest payment would also go down. BUT if USD is likewise depreciating, the bonds should hedge against the loss of value of the interest payment??

By: Syed kollol

Syed kollol — Tue, 02 Oct 2007 12:50:52 +0000

the kwait diner is more valuable than US $. is this because they have very high level of US dollar reserve due to huge export of oil?? But as their global investment is very low/almost nothing compared to the US therefore no country value their currency against kwait diner , is this correct??

By: barry econ

barry econ — Tue, 02 Oct 2007 05:54:32 +0000

Yes that part is true. Stability of currency is not the only thing to look at. Seeing which economy is strong on the global scale is also a factor. the US for the longest time was a net importer to a WIDE degree. Cozying up to them meant less cost on exchange rates etc. It also meant a degree of stability to peg to another 'stable' economy. Right now the US isn't so stable so you see more movement to other currencies like the Euro.

By: Syed kollol

Syed kollol — Sat, 29 Sep 2007 05:14:29 +0000

i know they are the vehicle currency. my question is why they are vehicle currency ?? suppose, Diner has no or almost very little impact compared to a change in US $ . My question is why is that?? is this because of the worldwide investment of US companies or some other effect??

By: barry econ

barry econ — Mon, 24 Sep 2007 05:35:05 +0000

Quite simply it is perceived to be a strong currency that the country can default o in the even of a crisis. Benchmark is also called a 'vehicle currency'.

By: Syed kollol

Syed kollol — Sun, 23 Sep 2007 15:20:41 +0000

why a country needs to use US $ or GBP as a becnmark?? What are the criteria?? could you please explain?

By: Aforka C Ibe

Aforka C Ibe — Thu, 16 Aug 2007 08:33:50 +0000

The material is fine for my research.