international transactions of a nation separates into 3 accounts:
-current: goods and services
-financial: financial capital to and from the country
-capital: small capital flows.trade balance: differences between exports and imports of g&s: trade deficit, surplus
current account balance: measures all current, non-capital transactions between a nation and the world.
goods and services: exports and imports
investment income: abroad
unilateral transfers: foreign aid received by foreigners-given to foreigners
sector exterior: muestra las relaciones delos mercados de un pais con el resto del mundo.
*los intercambios de bienes y servicios quedan regristrados en la balanza de bienes y servicios
*los flujos de capitales qedan registrados en la balanzade capitales
balanza de pagos: doc. contable que recoge las relaciones economicas de los residentes deun pias con el resto del mundo durante un periodo.
capital: records of transfers of specifictypes of capital: debt forgiveness, personal assets that mgrants, transfer of real state assets.
people hold foreign curencuy in order to buy goods and services,to take advantage orinterest rate differentials ad to speculate.
3most traded currecncies: euro, yen, pound.
appreciation:becomes more valuable
1.trade and investment.transact in foreigncurrencies.
2.interest arbitrage: taking advantage of interest rate, borrow money where low and sell it where high.
3.speculation: sell over valued and buy undervalued.
4main actors in foreign currencymarkets:
-retail customers: hold foreing currency in order to trade.
-commercial banks: hold inventories of foreign currencies as part of the services to customer
-foreign exchange brokers: middlemenbetween buyers and sellers
-central banks: country´s bank of banks
exchange rate risks: stem from the fact that currencies are constantly changing in value.
forward exchange rate: the price of...