FX

Question 1

Retail market
Real money market
Sovereign wealth

Answer 1

1. Retail
   Especulative trading
   cross border invest
   Small deals with small companies for tourism
2. Real Money Market
3. Sovereign wealth

Funds of nations to reserve wealth

Question 2

Traders look up for

Leverage account is

Answer 2

nominal exchange rates

Account which uses derivatives

Question 3

MUITO IMPORTANTE

COMO LER

USD

Answer 3

BRL = PRICE
USD = BASE

USD in TERMS of BRL

Question 4

fwd rate

Answer 4

Amount of each currency will be trade in a certain point in time

Question 5

how much is a point?

Answer 5

0.0001

(0. mil contra)

Question 6

Currency depriciation

Elasticity approach (Marshal lener)
Absortion approach

j-curve

Answer 6

abosrtion
(X-M) = (S-I) + (T-G)

. Currency devaluation only provides temporary improv.

. Will reverse after domestic wealth redistribution

.Long Run Only improves if
↓Fiscal deficit or (T-G)
↑Savings than invetments (S-I)

Elasticity
Elasticity of exports and imports

If the price goes up and the demand goes down means you have linked goods.

J CURVE (depreciate currency to adjust trade balance (X-M)

Long run -
currency depreciates
⬇
Foreign Prices rise
⬇
M is going to be less, X is gonna be higher

SHORT RUN (J CURVE)
YOU’VE ALREADY SETED YOUR DEALS

prices rise, demand stay the same. M>X, therefore (X-M) ⬇

Question 7

exchange regime (6)

Answer 7

Fixed peg
Managed within +- 1of fixed peg value

crawling peg
as fixed, but the peg value is periodcly review

target zone
Managed to remain with the upper and lower limit vs a single or basket of currencies

dollarization
Use another country currency

currency board
Ex. Hong kong dolars, canadian dolars

só pode emitir novas moedas de acordo com a moeda base

monetary union
All countries with the same currency