Foreign Currency

Abstract

Emerging market are countries which are in the process of development. Currently, according to The World Bank has categorizes each of 46 countries as 'emerging markets' (upper-middle-income economies), including South Africa, Mexico, Brazil, Malaysia, Ukraine, Russia and Turkey. The International Monetary Fund (IMF) categorized 150 countries as “emerging markets” (emerging and developing economies),including South Africa, Mexico, Brazil, Pakistan, China, India, the Philippines, Thailand, Malaysia, Ethiopia, Hungary, Poland, Sudan, Lithuania, Ukraine, Russia and Turkey . The essential characteristics of emerging markets have rapidly growth in its economy but with a risk of unstable financial and political situation. This research paper focus on a foreign currency from an emerging market and provide an analysis of that currency against the US dollar over the 5-year period ending in 2010.

Emerging Market Foreign Currency

Introduction

The Chinese Yuan has been artificially weakened against the U.S. dollar as China engaged in a decade long export-driven strategy for economic growth. It is estimated that if their current growth rates were to be sustained over a long period, China in 2050 would represent an economic world (26.6%) equal to that of the United States (26.9%).

Discussion

Chinese currency -Yuan

According to foreign media, it would not surprise that Yuan in a major international circulation coins. This is an inevitable result of the emergence of China as the largest exporter and second largest economy in the world. The trend towards internationalization of the Renminbi would lead to a “monetary revolution” which would exert significant influence on the world market. The holders of the Chinese currency would facilitate the internationalization of business. In that way, companies would raise more funds by issuing bonds overseas as easy to avoid the risk of currency fluctuations. Through the issuance of Renminbi, China could benefit from the tax on currency issue, as does the United States, and the flow of overseas currency to ease inflationary pressure.

(See apendix)

Yuan and Dollar Analysis

However, experts have warned that unscrupulous internationalization expose the national monetary system with a higher risk, so caution must be maintained and judge the situation objectively (www.forecast-chart.com).

China's national currency has updated its historical maximum against the dollar. The bank of China increased its reference rate of the Yuan: U.S. dollar is now worth 6.5883 Yuan. From this course, the Chinese currency during the auction may deviate by 0.5 percent in both directions. Yuan had reached on the basis of trade mark of 6.5827 per dollar (finance.yahoo.com). ...