Posted on 12 April 2011
Tags: aids, beneficial, Better, central bank, central interest, circumstances, control, country, currency, decline, doubt, ECB, euro, Euroâ, Europe, European, European Central Bank, european countries, Euros, Euro’s growth, extent, factor, financial market, financial markets, forecast, Forecast of Euro, forex, Forex Market, Germany, Greece, Growth, Improve, increase, interest rate, interest rates, Ireland, Italy, Markets, Netherlands, package, Pip, Portugal, prediction, predictions, probability, purchasing power, recession, recovery, recovery phase, result, Spain, steam, the euro, the European Central Bank, the Netherlands, Threat, unity, US, US Dollar, USA, USAâ, value, weak economies, width, World Economy
It is never easy to predict where the forex market will be headed. This article focuses only on the Euro, and how its price will regulate this year. Will this year prove to be beneficial for the Euro or will it face a decline? Read further to get a better picture.
Forecast of Euro for the Year 2011
The Euro is used by 16 European countries, as a collective currency. These countries include both strong and weak economies. Strong economies are the Netherlands and Germany, and weak ones include Portugal, Italy, Spain, and Ireland.
The European Central Bank (ECB) is the determining body of the Euro policy and the central interest rates. However, each of these 16 countries is governed independently. although financial unity exists, but these countries are not administratively united.
Therefore, it is difficult to maintain and from a monetary Euro policy that works best for the currency. The economies that are weak would naturally want the Euro to be equally weak in order to improve their exports.
In the same way, the stronger economies desire the Euro to grow stronger, which would increase their purchasing power. Europe is in the recovery phase after the recession that hit in 2008. As a result, this year will witness an increase in those conflicting pressures. This is going to have a hefty toll on the Euro.
After Effects of the Recession on Euro
Greece and Ireland are the two weaker economies among the 16 countries. These countries were given two major aid packages in the year 2010, when their economy was practically devastated. This put considerable pressure on the Euro and drove it down to 1.1$. The probability for circumstances to shape up in a way that another such aid package might be required in 2011 is substantially high.
According to some, Portugal will be on the receiving end this time. However, Portugal being a smaller country might not weaken the Euro to the extent the last two aids did.
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Posted on 03 August 2009
Tags: cash flow, Cross-Currency swaps, currency swap, Danmarks Nationalbank, Europe, foreign exchange, foreign exchange market, forex, Forex trading, FX market, global financial crisis of 2008, interest rate, interest rate swaps, maturities, over-the-counter derivatives, Reserve Bank of Australia, Salomon Brothers, Structure of currency swap, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Norges Bank, the Reserve Bank of New Zealand, the Sveriges Riksbank, the Swiss National Bank, United States Federal Reserve System, Uses of Currency swaps, World Bank
A currency swap also called cross currency swap is a name given to a foreign exchange agreement between two parties. This agreement is done to exchange principal and fixed rate interest payments on a loan in one currency for principal and fixed rate interest payments on an equal (regarding net present value) loan in another currency. comparative advantage motivate the Currency swaps.
Structure
For a variety of maturities Cross-Currency swaps can be negotiated occassionaly in excess of 10 years.
Unlike interest rate swaps, the exchange of the principal amount is involved in currency swaps. Interest payments are not netted (as they are in interest rate swaps) because these interest payments are denominated in different currencies. Cross-Currency swaps are identical to interest rate swaps, they are over-the-counter derivatives.
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