Banking & Insurance Professionals
|
Activity:
29 views;
last activity : 01 13 2011 11:16:41 +0000
|
|
|
|
1
Excessive volatility in capital inflows
2
There will be a surplus of things
3
Conference understanding is something and practical steps is something else
4
higher gdp growth rate.
|
|||||||||||||||||||
|
|
If there is currency devaluation there is excessive volatility in capital flows facing some emerging market economies. one must at all costs avoid competitive devaluation and resist any resurgence of protectionism. At the end of the two-day Summit of G20 leaders, called for moving towards more market-determined exchange rates. An undervalued Yuan or a weak Dollar also has ramifications for India and several other countries in terms of their exports becoming uncompetitive. |
2
|
I think with imports from china increasing every day, we should consider the net impact of exports and imports.
|
Please do consider the following analogy so that you will be able to understand what happens if there is currency devaluation. The equilibrium price of a single car is $10,000. If the government imposes no restrictions on car prices (i.e. car prices are flexible), then the free market price of a car will be $10,000. Further, there will be no surplus or shortage of cars -- everyone who wants to buy a car (at $10,000) will find one to buy, and everyone who wants to sell a car (at $10,000) will find a customer. Now, suppose the government imposes a price floor on cars of $15,000. At the official price of $15,000, many people will want to sell cars, but few people will want to buy cars – there will be a surplus of cars. If the government wants to avoid ending up hip-deep in unsold cars, it will have to buy the extras itself. (Note: this is precisely what the government does in the case of farm subsidies.) |
0
|
|
One should not be elated by the conference understanding because one will find the very countries in the conference will be violating this to protect their markets/economies.
|
0
|
|
If a country is a export oriented country having more and more exports year by year, the country can take the competitive advantage in the international market by devaluating its currency. For example if india want to buy jet rocket engine. only america and china is manufacturing it. China yaun is 10/- and american $ 48/-engine cost in china is 13000yaun and in america is 5000$. china sells it 1.30 lacs and america 2.40. if china devaluated its currency to 7/- in currency market then it can supply it for 91000/- only. so every customer will turn to china, sale of goods and services increases, gdp grows faster rate, development is at zoom pickup.
But it has some limitations:
1. Countries exports are more than imports.
2. Foreign debt is less.
3. comparable commodities.
4. quality of the product is good.
|
0
|
|
|
For top social networking companies such as Twitter and Facebook, internet are realising these... |
|
|
704 referals
6 arguments,
261 views
|
|
|
Windows the very word which changed how we use our PC's and other Computer or laptop related... |
|
|
1317 referals
32 arguments,
485 views
|
|
|
The world is considering India as the fastest growing economy. The crticism about India's... |
|
|
0 referals
5 answers,
184 views
|
|
|
|
|
|
|
|
|
we all know the perils of talking on cell phones while driving. besides being hazourdous to... |
|
|
290 referals
2 votes,
36 views
|
On one hand where Moody's downgraded the outlook on India's banking sector to 'negative' from 'stable' S P said it is right according to international standards. At this time every one has different views on the same subject and we have to decide... |
We never know what can be next. All we need to do is to be ready for the rainy day. Save as much as you can. |
So the trend again looks gloomy. Markets are at all time low. Economy again hit. Do you think we are heading towards another recession? |