(1) A sustained balance of payments surplus will increase the demand and appreciation of domestic currency in the international financial market, which is not conducive to the export of domestic commodities and has a negative impact on the growth of domestic economy.
(2) The persistent balance of payments surplus will destroy the balance between domestic total supply and total demand and increase inflationary pressure. A surplus in the balance of payments means that a large number of goods are exported, which may lead to a shortage of goods in the domestic market and bring inflationary pressure. In addition, a large amount of foreign exchange obtained by exporters will be converted into local currency, which will increase the supply of local currency and bring inflationary pressure. Moreover, if there is a surplus in the capital account and a large amount of capital flows, the country must invest the corresponding local currency to buy these foreign currencies, which will increase the supply of local currency and bring inflationary pressure.
(3) The persistent balance of payments surplus is easy to cause international economic friction, which is not conducive to the development of international economic relations. Because a country's balance of payments surplus means the balance of payments deficit of other countries, thus affecting the economic development of these countries. If surplus countries do not take necessary measures to reduce excessive surplus, it will inevitably lead to international economic friction.
See textbook P73 for the answer analysis. 37. Try to explain the main reasons for the development of European money markets.
(1) The development of international trade and investment after World War II.
After World War II, the internationalization of production and capital is the fundamental reason for the emergence and development of European money markets. After the war, multinational corporations have become an important force in the international economic arena. Their global expansion and unprecedented scale of overseas investment and international trade require more flexible and international financial services. It can be said that the European money market is growing to meet the unprecedented development of global investment and international trade of multinational companies.
(2) Foreign exchange and financial control in various countries.
Since the late 1950s, the balance of payments deficit of the United States has increased year by year. Therefore, the United States had to take measures to adjust it, and successively implemented the "M Regulation", "Interest Balance Tax" and "Guidelines for Voluntary Restriction of Foreign Loans" to limit capital outflows. In order to avoid these foreign exchange and financial control measures, American commercial banks and multinational companies have transferred their funds to their branches in Europe, absorbed operating deposits overseas and focused on eurodollar market. These measures have greatly promoted the development of eurodollar market.
(3) the relative decline in the status of the dollar.
At the end of 1960s, due to the frequent dollar crisis, the status of the dollar declined day by day, and the international market began to sell dollars and snap up gold and other national currencies, among which some hard currencies, such as Deutsche Mark, Swiss franc and Japanese yen, became the main snapping targets. In order to maintain the stability of local currency exchange rate, curb inflation and limit capital inflow, Germany, Switzerland and other countries have implemented the policy of "returning interest tax", stipulating that non-resident deposits not only do not pay interest, but even can return interest. However, if you open an account in foreign exchange, you will not be restricted by this policy, so non-residents will switch to foreign exchange to open accounts or transfer their original funds to other countries. As a result, European currencies such as euro mark, euro Swiss franc, euro pound and euro yen appeared.
(4) The emergence of petrodollars.
In the 1970s, oil prices rose sharply, and members of the Organization of Petroleum Exporting Countries accumulated a large amount of oil revenue. Oil is priced and settled in dollars in the international market, so these oil recipients are called "petrodollars". However, oil-producing countries have abundant funds, and non-oil-exporting countries have a huge balance of payments deficit, so they need to raise funds to make up for the deficit. In addition, the domestic financial system of oil-producing countries is underdeveloped, so a large number of "petrodollars" have been lent to countries with balance of payments deficits through the European money market. Petrodollars are huge, and it is estimated that the current market size of Petrodollars can reach more than 1 trillion dollars, which is an important source of funds in the European money market.
(5) The necessity of establishing financial centers in Asian countries.
At the end of 1960s, many countries in Asia, especially Singapore and Japan, experienced rapid economic development. At the same time, western multinational companies have also strengthened their investment in Asia, which has enabled central banks and private individuals in some countries in the Asia-Pacific region to accumulate a large amount of income. On the one hand, they put their funds into the European money market to earn interest, on the other hand, they actively develop their own financial markets and build an international financial center. Just at this time, Bank of America planned to establish an overseas dollar lending center, so in June 1968 10, Bank of America Singapore Branch opened the "Asian Currency Unit Account" to handle foreign currency deposit and loan business for non-residents. By the end of 1970, Citibank, HSBC and other 16 banks were also allowed to start this business, and the Asian money market was formally established. Subsequently, Tokyo, Hong Kong, Manila and Bahrain all started offshore business one after another, and the scale of Asian money market was expanding day by day.
Asian money market is a regional offshore financial market developed in the Asia-Pacific region. It is an important extension of European money market. More than 90% of its trading currency is US dollars, so it is usually called Asian dollar market.
(6) Various financial innovations.
A major driving force for the development of European money market is various financial innovations in this market. The European money market is not subject to any national or regional laws and regulations, and it is easier to introduce various financial innovations, such as European bonds, forward interest rate agreements and swap transactions. These financial innovations enable borrowers of funds not only to enjoy very flexible and convenient financial services, but also to invest at a lower cost than traditional financial markets and obtain higher returns, thus maximizing their own interests.
See the textbook P223-224.
38. Please describe the non-economic factors that affect exchange rate fluctuations.
(A) * * * Intervention
At present, the major developed countries all implement floating exchange rate system, but this floating exchange rate system is not a system in which the exchange rate is completely determined by the market. The management authorities of various countries may also take some intervention measures for the sake of macroeconomic objectives and suppression of abnormal exchange rate fluctuations. * * * There are four main ways to intervene in the exchange rate: one is to buy and sell foreign exchange directly in the foreign exchange market and keep the exchange rate within a certain range; Second, adjusting domestic monetary and fiscal policies indirectly affects the exchange rate; Third, make comments in the international arena to achieve the purpose of influencing market information; Fourth, carry out international cooperation with other countries to maintain exchange rate stability. For example, in order to achieve macroeconomic goals, the central bank can indirectly intervene in the foreign exchange market through monetary policy, thus affecting the long-term changes in the exchange rate. In order to suppress exchange rate fluctuations, we can directly intervene in the foreign exchange market by buying and selling foreign exchange, which has an immediate effect on suppressing exchange rate fluctuations.
(2) International reserves
The adequacy of international reserves held by a country's central bank reflects the country's ability to intervene in the foreign exchange market and maintain exchange rate stability, so the level of foreign exchange reserves plays an important role in the country's monetary stability. Too little foreign exchange reserves will often make the market worry about the country's ability to stabilize the exchange rate, thus making the market unwilling to hold and use the country's currency, leading to its depreciation; On the contrary, sufficient foreign exchange reserves will make the value of the country's currency stable and firm. Since the 20th century, China's foreign exchange reserves have exploded. 20 1 1 March, China's foreign exchange reserves exceeded 3 trillion US dollars. The large amount of foreign exchange reserves accumulated by China has also made the international community full of confidence in the stability of the RMB value, laying the foundation for the strong trend of the RMB after the exchange rate reform.
(3) Expected factors
The trend of exchange rate has a great relationship with traders' expectations of the future trend of exchange rate. When most traders in the market expect a country's currency to depreciate, they will sell a lot of the country's currency in the market, which will lead to the expected devaluation of the country's currency; Similarly, when most traders in the market expect a country's currency to appreciate, the country's currency will also appreciate significantly. At present, the short-term hot money in the international financial market is huge and speculative, and it is very sensitive to world political and economic events. The occurrence of accidental events will often have a great impact on investors' psychological expectations, thus causing exchange rate fluctuations.
However, we should see that there are many factors that affect investors' expectations, not only related to a country's economic growth rate, money supply, interest rates, inflation and other economic factors, but also related to the international political situation and the impact of accidents. Therefore, the expected impact on the exchange rate is more complicated and difficult to determine, thus increasing the difficulty of exchange rate forecasting.
foreign exchange speculation
With the acceleration of economic globalization and financial integration, the huge speculative capital shuttling between foreign exchange markets can accumulate huge buyer or seller power in a period of time, and then affect the trend of a country's currency exchange rate. According to the statistics of the Bank for International Settlements (BIS), 80% of foreign exchange transactions in the world are speculative. Therefore, speculation is the main factor affecting exchange rate changes.
(5) Other factors
In addition to the economic and speculative factors mentioned above, the change of exchange rate is also influenced by non-economic factors such as political factors and natural factors in the short term.
Political factors have a much greater impact on the foreign exchange market than the stock market and bond market. The emergence of political factors is often sudden and unpredictable, which will quickly change investors' market expectations and psychology in a short time, so it has a great impact on the foreign exchange market and often causes the exchange rate to fluctuate in a short time.
Some destructive natural factors (such as earthquake, hurricane, epidemic virus, etc. Sudden rampage will often have a huge impact on a country's economy and financial market, and then make its currency face depreciation pressure in the foreign exchange market. However, for some countries with the effect of "international capital refuge", the currency issued by them may appreciate in the short term. For example, in late April 2009, when the media disclosed that influenza A1N1(the epidemic was originally called "swine flu") broke out in Mexico and spread to many countries, hedge funds sought dollars in succession. On April 27th, 2009, the exchange rate of USD against other currencies generally rose, and the USD index rose 1. 1 1%. See the textbook P 129- 130.