We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

See Pricing

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
Back
2/4 steps

How Many Pages?

Back
3/4 steps

Sign Up and See Pricing

"You must agree to out terms of services and privacy policy"
Back
Get Offer

International Monetary Relations

Hire a Professional Writer Now

The input space is limited by 250 symbols

Deadline:2 days left
"You must agree to out terms of services and privacy policy"
Write my paper

Abstract

            Most countries engage each other trade, which makes monetary issues becomes a very central topic in many countries. This paper contains some calculations demonstrating relationship between currencies. In this particular paper we concentrate on the Euro and the US dollar. The paper concludes by giving thoughts on how individuals can protect themselves when doing financial investments, how   inflation affects exchange rates and finally lessons to be learn from differences between two country’s  inflation.

Don't use plagiarized sources. Get Your Custom Essay on
International Monetary Relations
Just from $13,9/Page
Get custom paper

International monetary relations

Converting Irish Euros into Dollars

1.      1.25 Euros = 1 dollar

1,000, 000 Euros = ? dollar

we cross multiply to get the value of x

       1.25   =           1

       1,000,000       x

       1.25x = 1,000, 000

        To get the value of x we divide both sides with 1.25

        1.25x      =    1,000,000

        1.25               1.25

         x          =     1,000, 000

                              1.25

         x          =     800,000 US Dollars

2  .Interest in Ireland

    Interest  =    P x r x t

                      1,000,000 x 5/100 x1

                  =  50,000

    Interest is 50,000 so we add the interest to the initial amount to get what you will have at the end    one year.

      1,000, 000 + 50,000

      =  1,050,000 Euros

Interest in the US

  Part 1 above we saw the money in U. S dollars will be $ 800,000

  Interest   =  P x r x t

                 = 800,000 x 2/100x 1

                 = 800,000 x 0.

02 x   1

                 =  $16,000

 The interest is $ 16,000 , so we add up the interest gained to the principal amount.

           800,000 + 16000

           = 816,000 US dollars

After one year we have seen the amount will be 1,050,000

  1.30 Euros =   1 US dollar

  1,050, 000 Euros = x dollars

We again cross multiply to get the value of x

1.30x     =    1, 050, 000

To allow us to go to the next step we divide both sides with 1.30

1.30x            =  1,050, 000

1.30                      1.30

x                 = 1,050, 000

                       1.30

                 =  807, 692.3 US Dollars

I would rather leave my money in Ireland, because the value for money is high and also the interests rate for Ireland are higher which will enable me benefit more from the savings.

            Banks and individuals can use covered interest rate to protect themselves when making international financial investments, which mainly yields from fluctuating currencies. Covered interest rate is a trade  which involves a foreign currency. This is usually a government bond with a matching agreement to protect themselves against currency risk. This trade takes advantage of inconsistencies of interests to make a risk free profit.

            Inflation has a major effect on exchange rates, when there is an inflation in a country, there will be tendency to have weak currencies. When a country experiences an inflation its currency will loosing against other currencies.

            What I infer from this differences is that inflation has an effect on the interests rate Ireland interests seems to be higher than those of U.S. This is due to the fact that its inflation rate is higher than that of US. The interests rate for Ireland are Five percent while those for US is two percent. At the first instance, the Euro has a higher value but due to prolonged inflation it looses the value to the U. S dollar.

 References

1. Robin Hahn el  (1999) Everything you need to know about the global economy, , Massachusetts: South End Press.

2. Halifax Initiative(December 1996)., “Control Options for International Currency Speculation”

3. Mahbub ul Haq, Inge Kaul, and Isabelle Grunberg (1996), The Tobin Tax: Coping with Financial Volatility eds. New York, London: Oxford University Press.

Cite this International Monetary Relations

International Monetary Relations. (2016, Oct 23). Retrieved from https://graduateway.com/international-monetary-relations-2/

Show less
  • Use multiple resourses when assembling your essay
  • Get help form professional writers when not sure you can do it yourself
  • Use Plagiarism Checker to double check your essay
  • Do not copy and paste free to download essays
Get plagiarism free essay

Search for essay samples now

Haven't found the Essay You Want?

Get my paper now

For Only $13.90/page