Types of exchange rates and their application. Types of exchange rates, their characteristics. There are several types of exchange rates

Introduction

International settlement or exchange transactions involve the mandatory comparison of prices (values) of national and foreign currencies, since behind each purchased or sold product there is a price expressed in money. This leads to the emergence of the exchange rate and the need to determine its level. The exchange rate is necessary for the mutual exchange of currencies in the trade of goods and services, as well as when taking into account the mutual movement of capital and credit. In particular, the exporter exchanges the received foreign currency for the national one, since the currencies of other countries cannot circulate as legal tender and purchasing means on the territory of this state. In turn, the importer exchanges the national currency for a foreign one in order to pay for goods purchased abroad. The debtor acquires foreign currency for national currency to pay off debt and pay interest on a foreign loan. The exchange rate is necessary to compare the prices of world and national markets, as well as the cost indicators of different countries, expressed in different monetary units. By means of the exchange rate, there is a periodic revaluation of foreign currency accounts of firms and banks.

1. Types of exchange rates, their characteristics

Any national monetary unit is a currency, however, as soon as it begins to be considered from the point of view of participation in international economic relations and settlements, it acquires a number of additional functions and characteristics.

Currency is any payment documents or monetary obligations expressed in one or another national monetary form used in international settlements. These are banknotes, treasury notes, various types of bank accounts, checks, bills of exchange, letters of credit and other means of payment.

These means of payment, denominated in different currencies, are bought and sold on the foreign exchange market. Demand and supply on it are formed as a result of the collision of monetary claims and obligations expressed in various currencies, mediating the international exchange of goods, services and the movement of capital.

Demand and supply of currency is formed for all transactions that mediate international exchange and are reflected in the balance of payments of any country. These can be trading (export-import) operations, and non-trading (transport, insurance, tourism), and other services, as well as the movement of short-, medium- and long-term capital (provision and repayment of loans, outflow and inflow of direct and portfolio investments). ).

An important element of the monetary system is the exchange rate, since the development of international economic relations requires measuring the cost ratio of the currencies of different countries. The exchange rate is required for:

* mutual exchange of currencies in trade in goods, services, in the movement of capital and loans. The exporter exchanges the proceeds of foreign currency for the national one, since the currencies of other countries cannot circulate as legal means of purchase and payment on the territory of this state. The importer sells national currency for foreign currency to pay for goods purchased abroad. The debtor acquires foreign currency for national currency to pay off debt and pay interest on external loans;

* comparison of prices of world and national markets, as well as cost indicators of different countries, expressed in national or foreign currencies;

* Periodic revaluation of foreign currency accounts of firms and banks.

Exchange rate - the "price" of the monetary unit of one country, expressed in foreign monetary units or international currency units.

Externally, the exchange rate is presented to the participants of the exchange as a coefficient of conversion of one currency into another, determined by the ratio of supply and demand in the foreign exchange market. However, the cost basis of the exchange rate is the purchasing power of currencies, which expresses the average national levels of prices for goods, services, investments. This economic (value) category is inherent in commodity production and expresses production relations between commodity producers and the world market. Since value is a comprehensive expression of the economic conditions of commodity production, the comparability of the national monetary units of different countries is based on the value relation that develops in the process of production and exchange. Producers and buyers of goods and services use the exchange rate to compare national prices with prices in other countries. As a result of the comparison, the degree of profitability of the development of any production in a given country or investments abroad is revealed. No matter how the operation of the law of value is distorted, the exchange rate, ultimately, is subject to its action, expresses the relationship between the national and world economies, where the real exchange rate ratio of currencies is manifested. When goods are sold on the world market, the product of national labor receives social recognition on the basis of an international measure of value. Thus, the exchange rate mediates the absolute exchange of goods within the world economy. The cost basis of the exchange rate is due to the fact that, ultimately, the international production price underlying world prices is based on national production prices in countries that are the main suppliers of goods to the world market.

There are various variations of the exchange rate, which are shown in Table 1.

Table 1 - Types of exchange rates

The national regime for regulating foreign exchange transactions for various types of transactions for residents and non-residents determines the degree of currency convertibility.

In the practice of international currency relations (in terms of paper money circulation), there are, first of all, the following two main types of exchange rates: fixed and floating.

Fixed exchange rates are rates established by a treaty or agreement between countries and supported by government regulation. Fixed exchange rates are divided into really fixed (characteristic of the gold standard) and agreed-fixed (before 1971-1973 were used in the IMF system).

Floating exchange rates are rates that are formed under the influence of supply and demand for currencies and are adjusted by the state.

In Russia, the main role in determining the exchange rate is played by the Moscow Interbank Currency Exchange, which is administered by the Central Bank of the Russian Federation. Based on the trading results, the Bank of Russia carries out fixing, i.e. setting the exchange rate of the US dollar against the ruble. Currency fixing is carried out twice a week: on Tuesday and Thursday.

There is also a nominal exchange rate, which shows the exchange rate currently in force in the country's foreign exchange market, and a real exchange rate, defined as the ratio of the prices of goods of the two countries, taken in the corresponding currency on a specific date.

All types of currencies can be divided into three groups:

1) freely convertible currency (hard currency) - the currency of countries where there are no legal restrictions on foreign exchange transactions for any type of transactions (trading, non-trading, capital movement) for both residents and non-residents. These, for example, are the US dollar and the euro;

partially convertible currency - the currency of those countries where there are quantitative restrictions or special licensing procedures for currency exchange for certain types of transactions or for various subjects of foreign exchange transactions;

non-convertible (closed) currency - the monetary units of countries where legal restrictions are provided for almost all types of transactions. Until mid-1992, the classic example of such a currency was the Soviet (Russian) ruble. The example of such a currency was the Belarusian ruble.

The mechanism of formation of supply and demand in the foreign exchange market is all the more consistent with market relations, the less there are restrictions in a given country on foreign exchange transactions.

The totality of all relations arising between the subjects of foreign exchange transactions is called the foreign exchange market. From an institutional point of view, it is a set of large commercial banks and other financial institutions, interconnected with each other by a complex network of modern communication means of communication, through which currencies are traded. The mechanism of the foreign exchange market is as follows. In this market, employees of a special department of a commercial bank (dealers), being at their workplaces, establish contacts with dealers of other banks through electronic communications. At the same time, they have in front of them the current quotations of the rates of all major currencies, according to which various banks are currently conducting foreign exchange transactions. Any bank can buy or sell currency at the best rate both at its own expense and on behalf of its client.

The buyer's bank's dealer contacts the seller's bank directly and concludes the deal. The transaction time ranges from several tens of seconds to several minutes. Documents confirming the transaction are sent later, and bank account transactions are usually completed within two banking days. This form of organization of currency trading is called the interbank foreign exchange market.

Most foreign exchange transactions are carried out in a non-cash form, i.e. on current and urgent bank accounts. Only a small part of the transactions in the market is in the exchange of cash and trading in coins.

In a number of countries, part of the interbank market is institutionalized in the form of a currency exchange.

Modern means of communication allow currency trading around the clock, except for weekends. A Western European bank with a branch structure around the world can simultaneously trade currencies in New York, Paris, Singapore and other cities, moving operations from one time zone to another. Thus, today we can say that national currency markets are closely interconnected, intertwined and are an integral part of the global world currency market.

The ratio of the exchange of two monetary units, or the price of one monetary unit, expressed in the monetary unit of another country, is called the exchange rate.

Fixing the exchange rate of a national currency in a foreign one is called a currency quotation.

At the same time, the exchange rate of the national currency can be set in the form of both a direct quotation (1, 10, 100 units of foreign currency = the number of units of the national currency) and a reverse quotation (1, 10, 100 units of the national currency = the number of units of foreign currency).

In most countries of the world, a direct quotation of the foreign exchange rate is established, in the UK - a reverse quotation, in the USA both quotations are used.

In relation to the participants in the transaction, there are: the buyer's rate (buy rate) and the seller's rate (sell rate). It is used for professional participants in the foreign exchange markets. The buyer's rate at which a resident bank buys foreign currency for national currency, and the seller's rate is the rate at which it sells foreign currency for national currency. So, the quotation of a commercial bank in a country that is part of the eurozone is 1 euro = 1.265 / 85 dollars. means that this bank is ready to buy from the client 1 euro for 1.265 dollars, and to sell - for 1.285 dollars. With a direct quote, the seller's rate is higher than the buyer's rate. The difference between the seller's rate and the buyer's rate is called the margin. It covers costs and forms the bank's profit on foreign exchange transactions. Any bank is interested in the lowest possible rate of the buyer and the highest possible rate of the seller, however, fierce competition forces banks to reduce the difference between them. The reduction in margins is offset by attracting additional customers, which allows you to win on the mass of profits.

Exchange rates differ according to the types of payment documents that are the object of exchange. These include the rate of telegraphic transfer, the rate of checks, the rate of money changers.

Cross course. It is a quotation of two foreign currencies, neither of which is the national currency of the party setting the rate, for example, the dollar to yen rate set by the Bank of England. Any rate obtained by calculation from the rates of two currencies to the third is a cross rate. Quotes of cross-rates in different national currency markets may differ from each other, which creates conditions for currency arbitrage, i.e. for operations in order to profit from the difference in exchange rates of the same monetary unit in different currency markets.

Exchange rates are differentiated depending on the type of foreign exchange transactions. There are rates of cash (cash) transactions - the "spot" rate, at which the currency is delivered immediately (within two business days), and the rates of futures transactions (forward rate), at which the real supply of currency is carried out after a clearly defined period of time.

The spot rate is the base rate of the foreign exchange market. In accordance with it, current trading and non-trading operations are regulated. Spot is a transaction carried out at today's agreed rate, when one currency is used to buy another currency with a final settlement date on the second business day, not counting the day of the transaction.

In term currency transactions (forwards, futures, options), the seller undertakes to sell the stipulated amount of currency within a certain period after the conclusion of the transaction at the rate established at the time of the conclusion of the transaction at the rate established at the time of the conclusion of the transaction, and the buyer undertakes to accept the currency at the specified rate.

In this regard, experts point out two essential features of transactions for a period:

the interval between the conclusion of a transaction and its execution;

setting rates at the time of the transaction.

And in this case, the correct assessment of the course perspective is of particular importance.

The purpose of transactions for the period is to extract profit from the difference on the day of conclusion and on the day of execution of the transaction. Forward transactions, therefore, are speculative transactions - they are concluded with the expectation of an increase or decrease in rates. Moreover, the longer the period (one, three or six months), the higher the risk of futures transactions, but it would be wrong to consider futures transactions with foreign currencies only as speculative transactions. When transactions are combined with trading operations, they serve as a means of hedging - insurance against the possible risk of adverse fluctuations in foreign exchange risk. If the exporter sells goods on an installment payment basis and is afraid of a decrease in the exchange rate of the payment currency, then he can insure himself by selling foreign currency for a period with delivery within a specified period - the moment the payment is received from the foreign buyer. In turn, the importer, having bought goods in foreign currency on credit with payment in a few months, simultaneously buys the currency he needs for a period at the exchange rate of the day the urgent transaction is concluded and thereby insures himself against a possible increase in the exchange rate of the payment currency by the time the goods are paid.

Among futures foreign exchange transactions, forward transactions have received special distribution during hedging operations, which is explained by a number of their features:

· arbitrary transaction amount;

transactions with real currency;

· the impossibility of transferring or selling the transaction to another party;

The parties are not obliged to inform about the conclusion of the transaction.

Urgent currency transactions are carried out through banks or specialized brokerage firms.

Forward rate - the rate set by a participant in a currency transaction, which will actually be carried out after a certain period of time on a fixed date. For example, in a bank in the eurozone at the rate of the seller "spot" on December 21, 2012, 1 euro. = $1.32 Forward rate for 3 months (i.e. delivery March 21, 2013) is $1.350. That is, the bank had to sell euros to its client on June 1 at 1,350 dollars. per piece, regardless of what the spot rate will be determined on that date.

A three-month forward exchange rate should not be confused with a three-month future spot rate. The forward exchange rate is a kind of “booking” of the exchange rate for a certain date in the future.

In turn, the forward operation is subdivided as follows:

· transactions "with an outrider" - a condition for the delivery of currency on a certain date;

· transactions "with an option" - the condition of an unfixed date of delivery of the currency.

Forward exchange rates are linked to the process of currency arbitrage.

In recent years, interest arbitrage has become widespread, which uses the difference in interest rates in different markets. Participants in the foreign exchange market carry out operations either for purely speculative purposes or to insure foreign exchange risks. The goals of risk insurers (hedgers) and currency speculators are directly opposite.

Insurance, or hedging, of currency risks caused by fluctuations in exchange rates is an action aimed at ensuring that neither net assets nor net liabilities in any currency. In financial terms, this means actions to liquidate so-called open foreign currency positions. There are two types of open positions: 1) "long" position (claims exceed obligations) and 2) "short" position (obligations exceed requirements)

Hedging is a normal operation for exporters and importers, for whom it is more important to focus on a certain exchange rate during the term of a foreign trade contract than to expose themselves to the risk of foreign exchange losses.

Speculation in the foreign exchange market means actions aimed at opening a "long" or "short" position in a foreign currency. In this case, the actions of the participants in the foreign exchange market are based on a conscious calculation based on an assessment of the future dynamics of the exchange rate, and are aimed at extracting additional profit.

The profitability of speculative operations in foreign currency depends on how much the exchange rate of the national currency falls above the difference in interest rates on deposits in national currency, on the one hand, and in foreign currency, on the other.

A series of values ​​of the exchange rate of one currency against another over a certain period of time gives an idea of ​​the dynamics of both currencies relative to each other. The dynamics of the exchange rate of the two currencies, of course, does not give a complete picture of their real movement. For example, the rise of the British pound against the dollar does not exclude the possibility that the pound fell against the Swiss franc and remained stable against the euro.

When fixing the number of units of each national currency included in the "basket", a number of criteria can be applied. The most common criteria are such as the country's share in world exports, the country's share in the total GDP of countries whose currencies are included in the "basket", the country's share in world reserves, etc.

If the “currency basket” is given some name, then a new collective currency will be formed. The best-known collective units of account are the ECU (used within the European Monetary System and calculated on the basis of a "basket" of all currencies of this system) and the already mentioned SDR, the unit of account used by the IMF and calculated on the basis of a "basket" of five major currencies: the US dollar , German mark, French franc, Japanese yen, British pound sterling. Since 2001, the German mark and the French franc have been replaced by the euro. Due to the fact that the exchange rate of the “basket”, as a rule, is much more stable than the rates of individual currencies included in it, collective units of account, as well as various unnamed “baskets”, are widely used in international economic relations to index the currency of prices in contracts or the currency of the loan, as well as a number of countries when calculating the rates of national currencies. Thus, until 1992, the official exchange rate of the ruble was calculated on the basis of six currencies: the US dollar, the German mark (FRG), the Japanese yen, the French franc, the Swiss franc, and the British pound sterling.

"Swap" operation - a transaction for the purchase and sale of an asset on the terms of immediate delivery (spot transaction) with the simultaneous conclusion of a reverse transaction for an indefinite period. They are widely used by commercial banks in the foreign exchange market.

A "swap" transaction is a currency transaction that combines the purchase or sale of a currency on the terms of a cash "spot" transaction with the simultaneous sale or purchase of the same currency for a period at the "forward" rate. Transactions include several varieties:

· transaction "report" - sale of foreign currency on the terms "spot" with its simultaneous purchase on the terms "forward";

· dereport transaction - purchase of foreign currency on spot terms and its simultaneous sale on forward terms.

A currency swap is a purchase and simultaneous forward sale of a currency (deport) or, conversely, a simultaneous forward purchase of a currency (report). An interest rate swap is an exchange of interest rates on borrowed funds.

The combination of these two swaps leads to a completely new transaction: a currency-interest "swap", which is an exchange of both currencies and interest. This type of swap can be concluded between several participants.

Conclusion

currency cash price credit

The exchange rate expresses the ratio between the monetary organizations of different countries. In general, the exchange rate system is a set of rules by which the role of the Central Bank in the foreign exchange market is described. Particular cases of systems are rigidly fixed exchange rates and absolutely flexible exchange rates, which are set in the foreign exchange markets without the intervention of the Central Bank. The exchange rate policy is an integral part of monetary policy and must be consistent with its main goal - reducing inflation.

The rate of a particular currency is determined by the interaction of supply and demand in the foreign exchange market. Import creates demand for foreign currency and at the same time supply of national currency. Export creates a supply of foreign currency in a given country and at the same time a demand for its currency abroad.

Establishing the exchange rate of foreign currencies in the national (or vice versa) is called currency quotation. In modern conditions, the quotation is carried out by state (national) and largest commercial banks. There are two quotation methods: direct and indirect. With a direct quotation accepted in most countries of the world, including the Russian Federation, 1,100 or 1,000 foreign currency units are expressed in national currencies. With an indirect quotation, adopted in England and partly in the USA, the national currency of a given country is taken as the “basis”.

The currency is the irreplaceable monetary unit of every country. Without it, many transactions and contracts cannot be carried out.

The choice of the exchange rate system by any country, being the most important component of macroeconomic stability and economic growth, is determined by the level of development and size of the economy, the degree of its openness, the state of financial markets, the degree of diversification of production, the state of the balance of payments, the level of competitiveness, the amount of foreign exchange reserves, the degree the dependence of the economy on foreign trade, the socio-political climate in society, the state of the national monetary system, the nature and nature of the economic shocks faced by a particular country.

Bibliography

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5. Zharkovskaya E.P., Arends I.O. Banking. Lecture course. 2nd edition. Moscow: Omega-L. 2008

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The most important elements of any monetary system are the currency and the exchange rate.

CURRENCY (from Italian valuta - price, cost) is a monetary unit used to measure the value of the value of goods.

concept "currency" applied in three meanings:

a) the country's monetary unit (dollar, yen, ruble, etc.) and one or another of its types: paper, metal;

b) foreign currency - banknotes of foreign states, as well as credit and means of payment denominated in foreign monetary units and used in international settlements;

c) international (regional) monetary unit and means of payment (SDRs issued by the IMF and EURO issued by the European System of Central Banks, headed by the European Central Bank).

Depending on the mode of use, currencies are divided into:

a) fully convertible (freely convertible),

b) partially convertible (partially convertible),

c) irreversible (non-convertible, closed).

Completely reversible the currencies of countries whose legislation has practically no currency restrictions are called. These currencies are exchanged for any other currencies without special permission. These include the US dollar, Canadian dollar, Swiss franc, Japanese yen and some others.

Partially reversible are the currencies of countries in which currency restrictions remain, especially for residents 1 , in relation to a certain range of foreign exchange transactions,

To irreversible include the currencies of those countries in which there are various restrictions and prohibitions for both residents and non-residents regarding the import and export of national and foreign currency, foreign exchange, the sale and purchase of currency and currency values, etc.

Currency convertibility is one of the tools that neutralizes the influence of national borders on the movement of goods, services and capital on the scale of the world market.

CONVERTIBILITY, or convertibility (from lat. convertere - to change, convert) - the ability of the national currency to be freely, without restrictions, exchanged for foreign currencies and vice versa without direct state intervention in the exchange process.

EXCHANGE RATE - this is the value ratio of two currencies during their exchange, or the "price" of the monetary unit of one country, expressed in the monetary units of another country or in international means of payment. It reflects in an average form a complex set of relationships between the two currencies: the ratio of their purchasing power; inflation rates in the respective countries; demand and supply of specific currencies in international currency markets, etc.

The most important element of the monetary system is currency parity - the ratio between the two currencies, established by law. Under monometallism - gold or silver - the base of the exchange rate was monetary parity - the ratio of monetary units of different countries according to their metal content. It coincided with the concept of currency parity.

The exchange rate regime is also an element of the currency system. Differ fixed narrowly fluctuating exchange rates, and floating rates that vary depending on the market supply and demand of the currency, as well as their variety.

Under gold monometallism, the exchange rate was based on gold parity - the ratio of currencies according to their official gold content - and spontaneously fluctuated around it within gold points. The classical mechanism of gold dots operated under two conditions: free purchase and sale of gold and its unlimited export. The limits of exchange rate fluctuations were determined by the costs associated with transporting gold abroad (freight, insurance, loss of interest on capital, testing costs, etc.), and actually did not exceed ± 1% of the parity. With the abolition of the gold standard, the mechanism of gold points ceased to operate.

The exchange rate with fiat credit money gradually broke away from the gold parity, since gold was forced out of circulation into a treasure. This is due to the evolution of commodity production, monetary and foreign exchange systems. For the mid 1970s. the basis of the exchange rate was the gold content of currencies - the official scale of prices and gold parities, which were fixed by the MIF after the Second World War. The measure of the ratio of currencies was the official price of gold in credit money, which, along with commodity prices, was an indicator of the degree of depreciation of national currencies. In connection with the separation for a long time of the official, fixed by the state price of gold from its value, the artificial nature of the gold parity intensified.

The exchange rate has a great influence on many macroeconomic processes taking place in the world and national economy. The level of the exchange rate, which compares prices for goods and services produced in different countries, determines the competitiveness of national goods in world markets, the volume of exports and imports, and, consequently, the state of the current account balance.

No exchange rate system has the exclusive advantage of achieving full employment and price stability.

The main advantage of a fixed exchange rate system- their predictability and certainty, which has a positive effect on the volume of foreign trade and international loans. disadvantages of this system are, firstly, the impossibility of conducting an independent monetary policy and, secondly, a high probability of errors in choosing a fixed level of the exchange rate.

The main advantage of a flexible exchange rate is that it acts as an "automatic stabilizer" that contributes to the settlement of the balance of payments. At the same time, significant exchange rate fluctuations negative affect finances, generating uncertainty in international economic relations.

The exchange rate, as a macroeconomic indicator that reflects the country's position in the system of world economic relations, occupies a special place in the system of indicators used as a means of state regulation of the balance of payments. The reason is that its increase or decrease immediately and directly affects the economic situation of the country. Its foreign economic indicators, foreign exchange reserves, debt, dynamics of commodity and financial flows are changing.

There are several options for establishing exchange rates between national and foreign currencies:

"floating" the exchange rate - the exchange rate of the national currency in relation to foreign ones - fluctuates freely depending on supply and demand;

regulated, or "dirty swimming" - the exchange rate of the national currency fluctuates until the changes reach a certain limit, after which the state begins to use regulatory levers;

"step swimming" - exchange rates fluctuate, but if certain limits are reached when “fundamental or structural changes” occur, when ordinary financial regulatory measures are insufficient, the country is entitled to devaluation, that is, a one-time change in the exchange rate;

"joint swimming" or the "currency snake" principle - exchange rates fluctuate around some officially established parity, but their fluctuations do not leave certain fixed limits;

fixed rate - the national currency is rigidly pegged to another currency or to another parity.

Common to all cases is the use of the dynamics of changes in exchange rates (or the ratio of one's own and foreign currency) to adjust the balance of payments. These changes can be one-time or regular and take the form of a devaluation (if the value of the national currency is constantly falling) or revaluation (if the national currency appreciates excessively).

Regulated or "dirty floating", "stepped floating", "joint floating", or the principle of "currency snake" - all forms of foreign exchange regulation are modified versions of the two main approaches to the regulation of exchange rates: a "floating" exchange rate, freely fluctuating in depending on supply and demand, and a rigidly fixed exchange rate. Individual elements of these two courses are combined with each other in various combinations.

A feature of a freely fluctuating exchange rate is that its fluctuations are considered, if not the only, then at least the most important means of regulating the country's balance of payments. This is explained by the adjustment mechanism: an easier way to balance the balance is to change the price of the currency that determines the ratio between prices, compared, for example, with the restructuring of the entire internal mechanism of economic relations (taxation, emission activity, etc.). Fluctuations in the price of the currency, occurring in parallel with the imbalance of payments, make it possible to make adjustments less “painfully”, without attracting external sources of financing. Supporters of the use of a "floating" exchange rate emphasize its ability to automatically adjust the amount of exports and imports.

A "floating" exchange rate allows the export of goods in which the country has a comparative advantage, and thus optimizes its participation in the international division of labor.

The advantages of a "floating" exchange rate include the ability of the government to pursue a relatively independent national economic policy (primarily aimed at providing more employment and increasing economic growth rates).

For example, supporters of the introduction of a “floating” exchange rate of the US dollar note the need for a more independent economic policy in the context of the US dollar performing the function of a world currency and the obligations arising from this.

In modern conditions, the exchange rate is influenced by many factors that neither the government, nor the Central Bank, nor any other official bodies can take into account.

It is the "floating" exchange rate that most realistically reflects these impacts and provides an effective response to them, indicating the real value of the national currency in the world market. This approach explains why, in most countries, completely free float was used only for short periods of time to determine the real price of the national currency.

At the same time, the "floating" rate has a drawback. Significant short-term fluctuations can destabilize foreign trade transactions and lead to losses due to the impossibility of fulfilling previously concluded contracts.

The listed shortcomings exclude the fixed exchange rate tied to any stable cost unit. A fixed rate allows you to predict entrepreneurial activity, regulate the level of profitability of future investment programs. I Almost all entrepreneurs and bankers are in favor of a fixed exchange rate of the national currency.

The fixed exchange rate is especially important for industries oriented to a significant volume of imports (high-tech industries) with a high share of exports in total production. Such a rate means the projected future amounts of the currency to be transferred, which are necessary for the development of investment programs associated with a long payback period for invested funds. A fixed rate is effective for organizations that have long-term and stable relationships. It is especially beneficial for preserving and maintaining the political "face" of the leadership and testifies to the strength and reliability of the government's economic policy. The government undertakes to maintain the stability of the currency, and, accordingly, the position of the country in the system of world economic relations. The country's leadership, as it were, confirms that there is enough trust and financial resources at the national and international levels in order to maintain the stability of the national currency. At the same time, it assumes the costs of "smoothing" possible short-term fluctuations, which are especially dangerous for foreign trade transactions.

The introduction of a fixed exchange rate poses a number of problems for the national government. The most important of them is the maintenance of "external balance", that is, the balancing of external payments in order to maintain the exchange rate at a constant level.

The effectiveness and expediency of using fixed or "floating" exchange rates as a means of regulating the balance of payments can be reduced to the following. As evidence of the stability and strength of the country's economic and political system, a fixed exchange rate can only exist in the context of a stable macroeconomic policy of the government. Job creation programs, tax policy - everything should be subordinated to the interests of maintaining a stable exchange rate of the national currency.

International settlement or exchange transactions involve the mandatory comparison of prices (values) of national and foreign currencies, since behind each purchased or sold product there is a price expressed in money. This leads to the emergence of the exchange rate and the need to determine its level. The exchange rate is necessary for the mutual exchange of currencies in the trade of goods and services, as well as when taking into account the mutual movement of capital and credit. In particular, the exporter exchanges the received foreign currency for the national one, since the currencies of other countries cannot circulate as legal tender and purchasing means on the territory of this state. In turn, the importer exchanges the national currency for a foreign one in order to pay for goods purchased abroad. The debtor acquires foreign currency for national currency to pay off debt and pay interest on a foreign loan. The exchange rate is necessary to compare the prices of world and national markets, as well as the cost indicators of different countries, expressed in different monetary units. By means of the exchange rate, there is a periodic revaluation of foreign currency accounts of firms and banks.

In fact, this is the comparative price of the currency of one state, expressed in a unit of currency of another country. Like any market price, the exchange rate is formed under the influence of supply and demand. Balancing the latter in the foreign exchange market leads to the establishment of an equilibrium level of the market exchange rate, i.e. the so-called “fundamental equilibrium” occurs.

The amount of demand for foreign currency is determined by the country's needs for importing goods and services, the expenses of tourists of this country, the demand for foreign financial assets and the demand for foreign currency in connection with the intentions of residents to invest abroad. The higher the exchange rate, the lower the demand for it and vice versa.

The amount of foreign currency supply is determined by:

• demand of residents of a foreign state for the currency of this country
• demand of foreign tourists for services in this state
• the demand of foreign investors for assets denominated in the national currency of a given state
• demand for the national currency in connection with the intentions of non-residents to invest in this country

The higher the rate of foreign currency in relation to the domestic one, the less number of national subjects of the foreign exchange market is ready to offer domestic currency in exchange for foreign currency and, conversely, the lower the rate of the national currency in relation to foreign currency, the more subjects of the national market are ready to purchase currency.

It is necessary to distinguish between the exchange rate and the parity of currencies, which is the value of the currency of a state, expressed in gold. For example, the dollar parity under the Bretton Woods agreement was $35 per ounce of gold. The presence of parity or a certain relationship to gold, which plays the role of a standard, allows the national currency to perform the function of a measure of value, “ideal gold”. Parity is not the same as an exchange rate, since the latter refers to the ratio of a certain currency to other currencies or its relative value, for example, 1 franc is equal to the value of 1/2 of the West German mark. This is the exchange rate of the franc and mark. The exchange rate can change, while its gold parity remains unchanged.

The formation of the exchange rate best explains how the gold standard works. Thus, from the last quarter of the 19th century until the outbreak of the First World War, foreign trade was dominated by the gold standard. The beginning of the transition to the gold standard was made by the Bank of England, which in 1821 established the exchange of banknotes issued by it for gold. At the end of the 19th century, the Scandinavian countries moved to the gold standard, Germany - in 1875, France - in 1878, Austria-Hungary - in 1892, Japan - in 1897, USA - in 1900. The gold standard created the basis for international monetary relations, characterized at that time by fixed exchange rates established on the basis of gold parities. The gold standard automatically influenced the circulation of money and the movement of capital, but did not work when the necessary equalization of the balance of payments exceeded the real proportions. This led to the development of inflationary and deflationary processes within individual states.

Under the gold standard, exchange rates had an objective basis in the form of gold parities, which measured the mutual ratios of monetary units by the weight of the metal contained in them and therefore accurately reflected the relative value of the exchanged currencies to each other. As long as the gold content of currencies was maintained and their exchange for precious metal, with the freedom to export and import gold, the exchange rate remained an unambiguous and solid economic parameter. With the abolition of gold as the basis of the monetary world order, this objective base of exchange rates disappeared. Therefore, the problem of comparing the mutual value of currencies has become extremely complicated, and the search for the most suitable criteria for this has become one of the permanent and intractable issues of international monetary policy.

Nevertheless, the position that the exchange rate depends on the ratio of the number of issued national and foreign money is indisputable. If the amount of money of one state will increase faster, then this will inevitably cause a change in the exchange rate of its monetary unit. Therefore, it is impossible, for example, to stabilize the exchange rate without taking into account the amount of national and foreign money exchanged with each other. In order to stabilize the exchange rate, it is necessary to use the coordination of the monetary policy of the central banks of different countries, which will be most effective when creating a single Interstate Bank. The European Union is following this path. This bank can determine such goals and means of the internal monetary policy of the member countries as the growth rate of the money supply, interest rates, required reserve ratios, etc.

Types of exchange rates

In the practice of international currency relations (in the conditions of paper money circulation), the following two main types of exchange rates are distinguished primarily: fixed and floating.

Fixed exchange rates - these are rates established by a treaty or agreement between countries and supported by government regulation measures. Fixed exchange rates are divided into really fixed (characteristic of the gold coin standard) and contractually fixed (until 1971-1973 they were used in the IMF system).

floating exchange rates- these are rates that are formed under the influence of supply and demand of currencies and are adjusted by the state.

There is also a nominal exchange rate, which shows the exchange rate currently in force in the country's foreign exchange market, and defined as the ratio of the prices of goods of the two countries, taken in the corresponding currency on a specific date. There are various variations of the exchange rate, which are shown in the table:

Classification of types of exchange rate

The modern practice of forming exchange rates highlights mixed forms of fixed and floating exchange rates:

• fixed exchange rates in relation to one national currency and floating in relation to another. So, the monetary unit of one state may have a fixed exchange rate against the US dollar, but float against the euro or the British pound sterling in the same proportion as the dollar
• fixed exchange rates against a group of currencies, when individual countries set fixed rates of their currencies against the currencies of a group of countries (usually trading partners), and rates are not fixed for other currencies and therefore can change at any time with changes in supply and demand. Within the framework of this option, the so-called group swimming was practiced, in which, by agreement between partners, fixed rates are established and all of them float together against a third currency (the Western European monetary system). Fixed exchange rates of national currencies were used in relation to SDRs (special drawing rights), when the national currency has a fixed exchange rate against SDRs that constantly change their rate. There was also a fixed exchange rate in relation to the currency basket, when some states that did not want to be associated with the SDR created special currency baskets. In all currency baskets, the leading role was played by the US dollar, the German mark, and the British pound sterling. This option was chosen by states that are especially heavily dependent on foreign trade.
• free floating currencies, although such floating is currently a sham. Most countries with fluctuating exchange rates practice the so-called “dirty” swimming, due to the fact that central banks, to one degree or another, conduct foreign exchange interventions to maintain the exchange rates of their currencies.

It is also possible to single out such systems of the functioning of the exchange rate as free or pure floating (the exchange rate is formed under the influence of supply and demand), managed floating (in addition to supply and demand, the exchange rate is strongly influenced by central banks, as well as various temporary market distortions), fixed rates (set by the country's central bank or on the basis of international agreements), target zones (limits for exchange rate fluctuations agreed between countries around a fixed equilibrium rate) and a hybrid exchange rate system (in the monetary union of countries there are states that freely float the exchange rate, and there are zones fixed exchange rate, etc.). In world practice, there are also examples of the use of the multiple exchange rate regime. However, this measure is regarded as temporary, since, while correcting certain imperfections in the domestic foreign exchange market, it generates new and more serious distortions in other areas of the economy. Ultimately, the use of a plurality of exchange rates always sets as its task the transition to a single rate in a specific and fairly short time frame. It is characteristic that in the former USSR the system of exchange rates of the Soviet ruble included:

• parity exchange rate of the ruble, which has a gold content of 0.987412 g of pure gold
• the official exchange rate of the ruble against the currencies of capitalist, socialist and developing countries, established by the USSR Ministry of Finance in the early 60s. XX century and regulated by the State Bank of the USSR
• the ruble exchange rate, taking into account differentiated currency coefficients (DVK), established by the State Planning Committee of the USSR and the USSR Ministry of Finance and acting separately for the European CMEA member countries, countries with freely convertible currencies, as well as Finland, India, the SFRY, the ARE, Iran and other countries (DVK acted separately for export and import operations)
• exchange rate of the ruble, determined by the coefficient of conversion of the balance of non-trading operations in transferable rubles into Soviet rubles

As a result, the question was constantly raised in the USSR about the advisability of introducing an economically justified exchange rate of the Soviet ruble, achieving the same circulation of Soviet and foreign currency rubles, as well as allowing enterprises to freely use their foreign exchange deductions (foreign currency in ruble equivalent).

Models for organizing the exchange of national currencies for foreign ones

In world practice, there are also basic models for organizing the exchange of national currencies for foreign ones and establishing exchange rates between them in the conditions of paper-credit money circulation. The first model is based on the fact that the exchange is concentrated in state organizations or officially authorized banking institutions and is carried out at exchange rates set by government bodies (central banks). The second model is based on the fact that the state is largely eliminated from participating in the direct exchange of national currencies for foreign ones and transfers these operations to the foreign exchange market. The exchange rate should, in principle, be determined by the market, based on the supply and demand of exchangeable currencies. However, the state, represented by the central bank, regulates the level of the exchange rate and the limits of its fluctuations through operations for the purchase and sale of currencies. The third model assumes that the state generally ceases to participate in foreign exchange transactions, transferring all these operations to the foreign exchange market. In this case, the foreign exchange market independently forms the exchange ratios of monetary units. At the same time, exchange rates fluctuate and change under the influence of market forces without any intervention of the central bank.

The first model is used in countries with closed currencies, the second and third models are typical for states that have established and maintain the convertibility of national monetary units.

Both floating and fixed exchange rates have their advantages and disadvantages. Thus, states with developed market economies have gradually abandoned fixing the parities of their currencies and switched to a system of floating rates, limited by the limits of fluctuations. The use of “pure” exchange rate fluctuations, based only on the action of spontaneous market forces, leads to frequent devaluations of currencies, strong short-term exchange rate fluctuations, large long-term deviations of real rates from “equilibrium rates”, and insufficient discipline” of states in relation to the optimization of inflation and budgets.

At the same time, countries in transition to a market economy, in the early stages of transformation, try to fix the exchange rate, primarily in order to combat inflation. Stabilization of the exchange rate of the national currency makes it possible to bring parity (according to purchasing power) and exchange rates closer together, which in an open economy is a prerequisite for stabilizing and stopping the outflow of capital into the sphere of foreign trade operations, to stop the outflow of capital into the sphere of speculative foreign exchange operations, since dumping operations in a stable economy occupy an insignificant place in the operations and incomes of banks, reduce and completely stop unprofitable exports, gradually strengthen the confidence of the population and business entities in the national currency, increase the equity capital of banks, expressed in hard currency.

However, an attempt to stabilize the exchange rate requires the presence of significant foreign exchange reserves, as well as increased requirements for the rigidity and complexity of monetary policy in general. Nevertheless, fixing or stabilizing the exchange rate can simultaneously bring considerable political dividends for the state leadership. They are primarily related to the fact that inflation stops or completely disappears for a certain period of time. However, long-term stabilization of the exchange rate is hindered by a number of factors, which include the lack of foreign exchange reserves, the narrowness and fragmentation of the foreign exchange market, the absence of a single exchange rate even in the “shadow” sector, and an excessively undervalued national currency due to speculative reasons.

The exchange rate serves as a tool for cost comparisons of the costs (prices) of the production of a national enterprise or an individual state with world market prices. It makes it possible to identify, quantify the result of foreign economic operations. Therefore, the exchange rate, which reflects the value ratio of the currencies of different countries, is important for the equivalent exchange and, along with other factors, affects the ratio of export and import prices, the competitiveness and profits of associations, enterprises and firms. The cost basis of the exchange rate is due to the fact that the international production price is based on national production prices in countries that are the main suppliers of goods to the world market.

A fixed exchange rate, forcing the state to keep it at a certain level at all costs, can prevent the direct impact of external factors on the domestic economy, conserving structures and proportions that do not correspond to the changed international conditions of production and exchange. Nevertheless, a stable exchange rate (with fluctuations within fixed limits) is always preferred due to its simplicity and ease of use for the implementation and evaluation of the results of foreign economic activity. The stability of exchange rates depends on the observance of two important conditions:

• balance of payments between states
• sufficiency of foreign exchange reserves to maintain the exchange rate in the market in case of violation of the balance of payments

Therefore, the state of the country's balance of payments, primarily for current operations, has a direct impact on the exchange rate of the national currency. With a chronic passive balance of payments, the exchange rate of the national currency falls, with an active one, the exchange rate rises. Characteristically, for the dynamics of the exchange rate, the balance of payments on current operations is of primary importance not between two countries, but the overall balance of this balance for all states participating in international settlements with a given country.

Balance system

In turn, international settlements are associated with a system of balances, which includes the balance of trade, the balance of payments for current operations, the balance of capital and credit movements, the general balance of payments, the settlement balance for a certain date, and the settlement balance for a certain period.

The balance of trade is the most important component of the balance of payments and shows the ratio of the value of exports and imports of goods of a given country for a certain period of time (month, quarter, year). The balance of trade reflects the value of exports and imports, regardless of when goods are sold or received. So, export goods can be exported, but not sold, they can be sold in the reporting period, but sold on credit, i.e. have not actually been paid yet. The trade balance also takes into account goods exported not for sale, but, for example, as a gift, as well as goods for which the exporter does not receive a cash equivalent. Therefore, the trade balance does not reflect all receipts and payments related to foreign trade.

The current account balance of payments includes, in addition to the value of foreign trade, transport costs, tourism costs, investment income (the so-called income from invisible exports), as well as transfers - private and official transfers. A positive balance of payments on current operations creates the prerequisites for the export of capital from the country, and a passive one requires coverage by an appropriate inflow of capital, reflected in the balance of capital and loans. Therefore, the balance of payments for current operations is the ratio of exports and imports of goods, payments and receipts for transport, insurance, commission transactions, tourism, consumer transfers, interest and dividends on capital investments, payments for licenses, for the use of inventions, and it also reflects the country's military spending abroad.

The balance of capital and credit flows includes the movement of capital without reserves, direct investment, portfolio investment, reinvestment of profits, short-term and long-term capital, transfers and payments on loans.

The general balance of payments includes the balance of payments for current operations, the balance of capital and credit movements, as well as the movement of gold and foreign exchange reserves.

The settlement balance represents the requirements and obligations of a given country in relation to other states. These claims and liabilities include state (gold and foreign exchange and other) and private assets, direct investments, loans received and granted, and other liabilities of financial and non-financial corporations. Unlike the balance of payments, the balance of payments includes all claims and obligations in relation to other countries for which no payments have been made.

In countries with a developed market economy, a balance of payments report is compiled, which reflects all payments made to foreign countries over the past period (usually a year) and all receipts of funds from abroad, as well as a balance of payments for a five-year period, including the execution of the balance of payments for two previous years, preliminary execution of the balance of payments in the current year and a forecast of its development for the next two years.

The equilibrium of the balance of payments can affect the level of the exchange rate, regardless of the movement of long-term capital and current payments. At the same time, this equilibrium does not automatically provide short-term stability of the exchange rate, although in relation to the medium-term rate it is often the only effective means. Therefore, an imbalance in the balance of payments due to overflow (capital outflow) can coexist with an increase in the exchange rate and a positive trade balance as an integral part of the balance of payments.

At present, the theoretical possibility of settling mutual international claims and obligations with the help of continuous fluctuations in exchange rates and changes in the relative value of currencies has become a reality, has become an integral part of the modern mechanism of convertibility. Practice has confirmed the positive results of floating (within certain limits), but periodically regulated exchange rates. A rate-setting mechanism of this type is most in line with the modern principles of “openness” of national economies and their integration with the world economy.

Floating (within specified limits) exchange rates will eliminate the problem of conservation of the structure and proportions of the economy, since the deterioration of the position of the currency in the free market immediately signals an unfavorable state in a particular sector of the national economy and the need to take corrective measures by means of economic policy at the national or interstate level. But it must be borne in mind that this problem is not solved by the so-called “clean” floating of the currency (without the intervention of the state represented by the central bank). Thus, the introduction in 1930 of the mechanism of floating exchange rates in industrialized countries (PRS) assumed the transfer to the market of the functions of determining equilibrium exchange rates. However, the consequences of such a mechanism for regulating exchange rates were manifested in an increase in their fluctuations, which violated the stability of international trade, and also caused an imbalance in the trade and balance of payments.

Therefore, an active and flexible monetary policy on the part of central banks is required, which involves the regulation of exchange rates. This is due to the fact that through the exchange rate, the limitations of the national currency are overcome and its local value is transformed into an international value. Thus, a kind of cost criterion is formed, which makes it possible to conduct an orderly and regular exchange of currencies for each other. The exchange rate has a significant place in the entire mechanism of the internationalization of economic relations, since with its help the levels of national prices, wages and many other cost indicators are compared with those of foreign countries. On this basis, the effectiveness of export-import operations, the feasibility of the production of certain goods, the relative profitability of the development of certain sectors of the economy, and, ultimately, the degree of participation of the country in international

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INTRODUCTION

At the same time, each country requires that all settlements on its territory be carried out only in the banknotes of this country, and only by them should foreign buyers pay for the goods of producers of this country purchased for import. Because of this, international trade always requires solving problems related to:

1) organizing the actual purchase and sale of goods;

2) currency support for trade operations.

Currency and money concepts are close, but not the same. Money is Central Bank tickets, checks, coins circulating in the country. Currency - foreign banknotes, checks and coins. Currency is also money, but its scope is aimed at the world market. But the concepts of money and currency are not identical also because not all national signs of value can act as a currency. The currency is the money that is recognized by world communities as common equivalents. With regard to bank notes, which perform the functions of a measure of value and a means of accumulation both at home and on the world market, the concepts of currency and money coincide. In practice, they freely cross the border and return back. But non-convertible banknotes cannot be a currency.

But why is it impossible to abandon multicurrency and create a single money for the entire world market? After all, this would greatly facilitate international trade, in which all countries of the planet are interested. There are several reasons for this:

the presence of a national currency makes it easier for the government to find funds for settlements with those who receive money directly from the state. These include employees, including the army, the poorest citizens and firms that supply goods and services for government needs. As a last resort, the state can simply issue additional paper marks;

the presence of a national currency allows the state to manage the course of affairs in the country's economy;

the national currency makes it possible to ensure the full sovereignty of the country, its independence from the will of the governments of other countries.

having your own currency helps to avoid inflation, which "sick" the currencies of other countries.

1 . THE ESSENCE OF THE EXCHANGE RATE

Currency (exchange) rate - the price of one national monetary unit, expressed in monetary units of other countries.

In Western economic science, the problem of determining the exchange rate was formally raised to the rank of theory only in the 70s. 20th century Until that time, there were no objective prerequisites for the formation of this field of knowledge. The reason for the increased interest in the issue of exchange rates was the following:

The gradual liberalization of commodity and capital markets and, as a result, the transition from the analysis of closed economic systems to open economic systems in the 60-70s. XX century;

Introduction of a system of floating exchange rates since 1971

As in any market, the demand for and supply of a currency are concentrated in the foreign exchange market, and the price of a currency is formed as a special commodity. The price of a unit of foreign currency, expressed in national currency, is the exchange (exchange) rate. Thus, the exchange rate expresses the ratio between the monetary institutions of different countries.

In international banking practice, direct and reverse quotations are used. At the same time, in currency trading on the interbank market, the quotation is given with an accuracy (with the exception of certain currencies) up to four decimal places. With a direct quote, a certain amount of foreign currency (usually 100 units) serves as the basis for expressing the value of the corresponding amount of national currency.

The foreign exchange market does not have a universal measure of value for each of the goods. Therefore, another currency is used to express the price of a certain currency. For example: 1 USD = 0.797 EUR or USD/EUR = 0.797

That is, for one dollar they give 0.797 euros, or, in other words, one dollar costs 0.797 euros. A similar expression of the monetary unit of one country, through the monetary unit of another country of the country, is called the exchange rate, and the two currencies involved in its formation are called a currency pair.

In Russia, the picture will be something like this:

USD/RUR=33.2001 EUR/RUR=41.5068 GBP/RUR=50.6490

A similar way of recording the exchange rate, when the value of the national currency is expressed in terms of a foreign currency unit, is called a direct quotation system. This principle of formation of exchange rates is accepted in most countries. In a few states, a system of reverse (indirect) quotations has been adopted. In this case, the value of a foreign currency is expressed in terms of a national unit. If the reverse system were adopted in Russia, then the main exchange rates would be written as follows: RUR/USD=0.0303 RUR/EUR=0.0243 RUR/GBP=0.0205

This method of recording exchange rates is traditionally used in the UK, where the value of the national currency is higher than most foreign currencies. The European Union, with the introduction of the euro in 1999, also uses this quotation system. Similar terminology is used in forex. True, here the role of the national currency is played by the dollar. The fact is that, having been born on the ruins of the Bretton Woods system, the forex market inherited many of its characteristic features, in particular, the total dominance of the American currency. Just as it is customary in the domestic market to follow the exchange rates of foreign currencies relative to the national one, in the international currency market they monitor the exchange rates of all currencies against the dollar. So, saying that "the euro rose" means "the euro rose against the dollar", and the phrase "dollar fell" means that "the dollar fell against major currencies."

Those currency pairs in which the US dollar does not participate are usually called cross-rates: EUR / GBP

Since international currency trading is in some way a copy of currency trading within the state, each national currency is traded against the dollar according to the quotation system that is adopted in this state. In other words, if in Europe the dollar against the national currency is traded in the EUR/USD currency pair, and in Japan the dollar against the yen is quoted as USD/JPY, then in Forex the euro and yen are traded against the dollar in the EUR/USD and USD/JPY pairs.

Below are the major currency pairs that account for the largest trading volume.

EUR/USD GBP/USD USD/JPY USD/CHF

The first three pairs contain the currencies of the most developed economies in the world. As for the Swiss Franc, it is traditionally used as a safe-haven currency in times of instability and crises.

As you can see, the yen and the franc are traded in reverse quotes. This means that the chart of these currencies is, as it were, a mirror image of its "direct" counterpart. So, when the yen rises against the dollar, the USD/JPY falls, and when the yen falls, the USD/JPY rises. At first it seems rather uncomfortable, but you can get used to it.

In general, the exchange rate system is a set of rules by which the role of the Central Bank in the foreign exchange market is described. Particular cases of systems are rigidly fixed exchange rates and absolutely flexible exchange rates, which are set in the foreign exchange markets without the intervention of the Central Bank. Analyzing this problem, suppose that foreign currency is used only in transactions for the export or import of goods and services. Importers create demand for foreign currency. Exports, on the other hand, represent a source of foreign exchange supply. In the foreign exchange market, the supply of foreign currency interacts with the demand from imports. As a result, a certain exchange rate is established. The higher the exchange rate, the more rubles we have to pay for the dollar. The growth of the dollar, therefore, corresponds to the depreciation of the ruble (the appreciation of the dollar). And the downward movement reflects the appreciation of the ruble (depreciation of the dollar).

The most typical example of fixed exchange rates is the "gold standard". There are three main rules of the gold standard:

the state fixes the price of gold, and hence the value of its currency in gold terms;

the state supports the convertibility of the national currency into gold;

the state adheres to the policy of gold backing, or one hundred percent coverage. This means that the state has reserves of gold at least equal in value to the amount of money put into circulation.

Thus, the idea of ​​100% coverage is a fundamental element of a monetary system based on the gold standard.

It is currently impossible to analyze exchange rates without studying national money markets. Fluctuations in exchange rates, devaluation and revaluation, ultimately, are the result of a change in the ratio between national monetary units. "Foreign currency" is the entire money supply of a foreign country, and not just the working balances of banks in foreign currency. Therefore, the relative state of the money supply of different countries affects the exchange rates.

2 . TYPES OF EXCHANGE RATES

If the central bank of a certain state absolutely does not interfere in foreign exchange transactions by buying and selling foreign currency on the international foreign exchange market, then the domestic currency is in a state of "free floating". In practice, this rarely happens.

The system of rigidly fixed exchange rates, which involves the intervention of the state in their changes.

Fixed rate mode has the following advantages:

quantitative certainty (promotes trade and stimulates the flow of capital);

reinforces heightened confidence in monetary policy driven by the need to bring interest rates closer to those of the economy of the linking currency, as well as the need to control credit growth and government spending to prevent inflation from undermining the exchange rate;

curbing inflation. High confidence in monetary policy softens inflationary expectations in the labor and financial markets. However, this mode is not without its drawbacks. The country is not able to withstand certain economic shocks as a result of the loss of export markets and the insufficiency of foreign exchange reserves to support the fixed exchange rate. As a rule, these phenomena are accompanied by a sharp decline in domestic prices, which predetermine the decline in production and the growth of the army of unemployed.

When establishing a fixed exchange rate regime, there is a problem with regard to specifying the number of currencies, but in the case of "hooking for one currency", the country is characterized by the following:

this policy is convenient for understanding by all companies in all financial markets of the country;

the possibility of government manipulation of rates is significantly reduced; - the exchange rate risk in trade is reduced, since transactions carried out in one currency are favorable for a large trading partner; - the fluctuation of the exchange rate of one currency predetermines the fluctuation of the exchange rate of the domestic currency in relation to all functioning ones. In contrast, the fixed exchange rate policy with "hooking on a basket of currencies" is characterized by the following parameters:

foreign investors take this policy harder, assuming that the authorities are manipulating currencies, since the composition of the currency basket is not widely known. As a rule, in such cases, foreign partners assume the possibility of devaluation;

this policy eliminates the risk of appreciation of the value of a single currency, which is most favorable in terms of regulating transactions with all trading partners of the country. However, an increase in the value of the currency leads to a decrease in exports, an increase in imports, and thereby worsens the country's balance of payments.

Other advantages of this regime include the fact that currency fluctuations are much less if all currencies in the basket are weighted equally in relation to their hooked exchange rates.

Floating exchange rates. The monetary financial policy of the country is formed to a certain extent independently in the conditions of using a free-floating regime.

The mechanisms of exchange rate formation under a floating exchange rate are divided into "clean float" and "dirty float". "Pure floating" - exchange rate formation without the intervention of the central bank in the foreign exchange market. “Dirty swimming” - exchange rate formation with active interventions of the Central Bank in the foreign exchange market.

This rate allows you to maintain competitiveness and quickly adapts to external impulses and shocks, and most importantly, the government of the country is freed from the function of determining the appropriate course. Despite these advantages, a free-floating exchange rate regime is not without its drawbacks:

If the foreign exchange market is characterized by insignificant capacity, then under this regime, several large transactions can undermine the existing state;

This regime can ensure the effectiveness of monetary policy when regulated by the state, as well as the adoption of monetary and financial fiscal measures;

The unattractiveness for foreign investors and trading partners of the conditions of uncertainty under this regime should be recognized;

There is a threat of government manipulation ("dirty swimming"), which undermines the confidence of market participants;

If the country has the presence of large speculative capital flows, then the determination of exchange rates significantly limits monetary and financial independence.

The use of this regime is most effective in conditions of weak development of international commercial relations, i.e., when the state of production is not highly dependent on foreign trade.

For the introduction of floating exchange rates, the dominant conditions are the presence of a developed financial market, the degree of integration with the world system, the interchangeability of national and foreign monetary assets, as well as the degree of development of financial intermediation. Nevertheless, despite the absence of these factors, many states have switched to floating rates. The reasons for this are the imbalance in the balance of payments, the insignificance of official foreign exchange reserves to support fixed rates, and the desire to block "black" foreign exchange markets. The industrialized states were the first to switch to this regime, and then the developing ones.

exchange rate fixed trade

3 . FACTORS DETERMINING THE EXCHANGE RATE

How are prices set in the foreign exchange market, what determines exchange rates? As in any market, these prices depend on the supply and demand for a particular currency. The magnitude of supply and demand in the foreign exchange market depends primarily on the volume of mutual trade between certain countries. And the more, say, the dollar mass that Japanese firms have received from the sale of their goods in the United States and which must be converted into yen, compared with the mass of yen offered for sale for dollars by American firms that have sold their goods on the Japanese market, the more dollars will have to be paid for each yen. In other words, the higher the price of the yen, expressed in dollars, that is, the exchange rate of the yen against the dollar (and the dollar exchange rate, respectively, is lower).

The higher the prices and production costs at home compared with foreign ones, the greater the increase in imports compared to exports. Therefore, a high price level inside a country and a low price level outside it usually means high prices for foreign currency. This factor, which in the 1920s was considered the most important, was called the "purchasing power parity" of exchange rates. According to the concept of purchasing power parity, the change in the ratio of the exchange rates of two countries, other things being equal, is proportional to the change in the ratio between domestic prices and prices abroad. The stronger the desire to have foreign goods and use foreign services, the greater the price must be offered for foreign currency. As national income rises, so does the demand for imported goods. This causes a trend towards the depreciation of the national currency. On the other hand, high national income abroad lowers the price of foreign currency. All this is due to the country's "propensity to import": an increase in national income leads to an increase in imports almost as much as an increase in domestic consumption.

There are several long-term factors that affect the position of a particular national currency in the currency hierarchy (they are called structural factors):

Competitiveness of goods in world markets and its changes. They are determined, ultimately, by technological determinants. Forced export stimulates the inflow of foreign currency.

An increase in national income causes an increased demand for foreign products, while merchandise imports can increase the outflow of foreign currency.

Consistent increases in domestic prices relative to those in partner markets reinforce the desire to buy cheaper foreign goods, while the propensity of foreigners to purchase goods or services that are becoming more expensive disappears. As a result, the supply of foreign currency decreases and the domestic currency depreciates.

Thus, the first factor affecting the level of the national currency is the volume of exports and imports.

The state of the economy affects the level of the exchange rate:

inflation rate;

level of interest rates;

activity of the foreign exchange markets;

currency speculation;

monetary policy;

state of the balance of payments;

the degree of use of the national currency in international settlements;

acceleration or delay of international settlements.

The balance of payments directly affects the value of the exchange rate. An active balance of payments contributes to the appreciation of the national currency, as the demand for it from foreign debtors increases. The passive balance of payments generates a downward trend in the exchange rate of the national currency, because. debtors sell it for foreign currency to pay off their external obligations. The size of the influence of the balance of payments on the exchange rate is determined by the degree of openness of the country's economy. Thus, the higher the share of exports in GNP (the higher the openness of the economy), the higher the elasticity of the exchange rate with respect to changes in the balance of payments. The instability of the balance of payments leads to an abrupt change in the demand for the respective currencies and their supply.

In addition, the exchange rate is influenced by the economic policy of the state in the field of regulation of the components of the balance of payments: the current account and the capital account. With an increase in a positive trade balance, the demand for the currency of a given country increases, which contributes to its appreciation, and when a negative balance appears, the reverse process occurs. A change in the balance of capital movement has a certain impact on the exchange rate of the national currency, which is similar in sign ("plus" or "minus") to the trade balance. However, there is also a negative impact of the excessive inflow of short-term capital into the country on the exchange rate of its currency, since. it can increase the excess money supply, which in turn can lead to higher prices and depreciation of the currency.

The degree of confidence in the national currency in the national and world markets is considered to be a psychological factor influencing the exchange rate. The exchange rate is influenced by the extent to which the currency is used in world markets. In particular, the predominant use of the US dollar in international settlements and in the international capital market causes a constant demand for it and maintains its exchange rate even in the face of a decline in its purchasing power or a deficit in the US balance of payments.

The higher the rate of inflation in a country compared to other countries, the lower the rate of its currency, unless other factors counteract. Inflationary depreciation of money in the country causes a decrease in their purchasing power and a tendency for their exchange rate to fall. The rate of inflation affects the exchange rate. The higher the rate of inflation in a country, the lower the rate of its currency, unless other factors counteract. Inflationary depreciation of money in a country causes a decrease in purchasing power and a tendency for their exchange rate to fall against the currencies of countries where the inflation rate is lower. This trend is usually observed in the medium and long term. The equalization of the exchange rate, bringing it into line with purchasing power parity, takes place on average within two years.

The dependence of the exchange rate on the inflation rate is especially high in countries with a large volume of international exchange of goods, services and capital.

An increase in interest rates on deposits and (or) the yield of securities in any currency will cause an increase in demand for this currency and lead to its appreciation. Relatively higher interest rates and returns on securities in a given country (in the absence of restrictions on the movement of capital) will lead, firstly, to an influx of foreign capital into this country and, accordingly, to an increase in the supply of foreign currency, its depreciation and appreciation of the national currency. Secondly, deposits and securities in the national currency that bring higher income will contribute to the overflow of national funds from the foreign exchange market, reduce the demand for foreign currency, depreciate the foreign currency and increase the national currency.

If investors seek to get more foreign debt, bonds, stocks, bank deposits or cash, they thereby increase the price of foreign currency. In contrast, payments by other countries to a particular state contribute to the appreciation of its national currency. There is a second factor in the exchange rate - the movement of capital.

This factor, which determines the movement of capital, is closely related to currency speculation. If it were only about the export of goods or payments for current transactions, then the foreign exchange rate would probably be sluggish and fluctuate very little. However, when the euro falls from 1.04 to 0.97 dollars per euro, many begin to fear that it will fall even more. Therefore, they are trying to get rid of the euro. The increase in sales of the single European currency and the reduction in demand for it as a result of short-term speculative capital movements contribute to an even greater depreciation of its exchange rate.

Thus, small fluctuations in the exchange rate are often spontaneously exacerbated by the movement of "hot money" that moves from one country to another with any rumor of impending problems, a change in political direction, or a fluctuation in the exchange rate. When such "capital flight" begins on a large scale and in any one direction, it can lead to sharp movements in exchange rates and even to a financial crisis.

The movement of the exchange rate is influenced by the release of data and the expectation of the release of data. The concept of "data" can include the occurrence of the following events: the release (publication) of economic indicators of the host countries of traded currencies, reports on changes in interest rates in these countries, reviews of the state of economies and other events that have a significant impact on the foreign exchange market (for example, the end of the financial year in Japan on March 31, the presentation of the draft state budget by the Minister of Finance to Parliament, etc.). The expectation of some event and the occurrence of this event are strong movers of exchange rates. It is difficult to say what has a stronger impact on the market, the event itself, or its expectation, but we can say with confidence that the release of serious data can lead to significant and prolonged movements in exchange rates. The date and time of the release of this or that indicator is known in advance. There are so-called calendars of economic indicators and the most important events in the life of individual states (with specific dates or approximate time of their release). The market is preparing for these events. There are expectations and forecasts of what value of this or that indicator can come out and how it can be interpreted. The release of data can lead to sharp fluctuations in exchange rates. Depending on how market participants interpret this or that indicator, the rate can go either way. This movement of the rate can lead to an increase in an existing trend, its correction, or the beginning of a new trend. This or that outcome depends on several factors: the situation on the market, the economic condition of the host countries of the currencies in question, preliminary expectations and sentiments, and finally, the value of a particular indicator. Even before the release of information about this event, the exchange rate moves in a certain direction (the direction of interpretation of the future event), i.e. the market is "setting up". Therefore, often after the release of the data (if the information corresponds to expectations), the rate moves in the opposite direction. This is due to the fact that positions were opened on expectations, and when what was expected happened, these positions are closed. There is a so-called "profit taking" (profit taking). Situations when such events occur are characterized by the expression "priced in" (that is, the occurrence of this event is already included in the price - meaning the exchange rate of one currency against another).

Long-term trends in the movement of exchange rates are occupied by funds (hedge, investment, insurance, pension). One of their activities is investing in certain currencies. Possessing huge funds, they are able to make the course move in a certain direction for a long time. The funds are managed by the fund managers.

Depending on the principles of work, they can open long-term, medium-term and short-term positions. Fund managers make decisions based on sound analysis of the financial markets. They are armed with all sorts of types of analysis: fundamental, technical, computer, psychological, analysis of interconnected markets. Based on the processed information, fund managers try to foresee the consequences of certain events in order to open positions in the right direction in time. Thus, one of the tasks of their activity is to play ahead of the curve. Managers try to present the picture of the world of the currency market as a whole (so to speak from the height of their flight) and when the picture is clear, the choice of tools for work and the direction of trade takes place. Of course, none of the types of analysis can give an ideal result. However, using a proven (and improving) trading system and having significant funds, funds are able to start, strengthen and correct the strongest trends. Exporters and importers are users of the foreign exchange market in its purest form. Exporters have a constant interest in selling foreign currency, and importers - to buy it. With reputable firms engaged in export-import operations, there are analytical departments that specialize in forecasting exchange rates in order to more or less profitably sell or buy foreign currency. Significant influence of exporters and importers on the market is observed in the Japanese market of the dollar against the yen. If there are no strong trends in the market, then exporters do not let the rate go up high, and importers - deep down. Thus, they are able to hold their course in a certain range of levels for some time. From time to time, in analytical reviews of the dollar market against the yen, the levels of possible entry into the market of exporters (resistance level) and importers (support level) are indicated. It is also important for exporters and importers to track trends in terms of hedging currency risks. By opening a position opposite to the future operation, this type of risk is minimized (currency risk hedging). The impact of exporters and importers on the market is short-term and is not the cause of global trends, since the volume of foreign trade transactions is insignificant compared to the total volume of transactions in the foreign exchange market. Most often, their activity creates rollbacks (corrections) in the market, since when certain levels are reached, it becomes profitable to sell or buy foreign currency. Statements that can affect the movement of exchange rates appear during various reports, summits, meetings, press conferences, etc. (for example, meetings of the leaders of the G7 countries or a press conference after the next discussion of interest rates). In relation to politicians, there is such a thing as "talking a course." This means that at certain points in time, when the national currency exchange rate reaches levels that are unfavorable for a certain state, they begin to say that, in their opinion, the exchange rate will not go any further, that they will not allow further movement, that intervention is possible, etc. P. And since these people are trusted (they already have established authority and they have certain powers), their words begin to have a direct impact on the market. Most often this happens after a strong and long-term trend in one direction. Therefore, after such statements, traders may decide "not to tempt fate" and start "swearing" (closing existing positions). And this, in turn, leads to a correction of this trend. When the exchange rate is indeed at critical levels, then interventions by central banks may follow the statements. And this is a very strong event in terms of its impact on the market - the rate can move more than one hundred points towards the direction of intervention in a short time (sometimes in a few minutes). In addition, intervention may make market participants wary of opening positions in the old direction. This, in turn, can lead to collapsed movements in the exchange rate.

CONCLUSION

The most important feature of international trade in comparison with domestic trade is that it is served by different monetary units, that is, different national currencies.

At the same time, each country requires that all settlements on its territory be carried out only in the national currency, and only in this currency do foreign buyers pay for the goods they buy for import from the producers of this country. Because of this, international trade always requires solving problems related to:

organization of the actual purchase and sale of goods;

currency support for trade operations.

The reasons why it is impossible to abandon multicurrency and create a single money for the entire world market are as follows:

1) the presence of the national currency makes it easier for the government to find funds for settlements with those who receive money directly from the state. These include employees, including the army, the poorest citizens and firms that supply goods and services for government needs. As a last resort, the state can simply issue additional paper marks;

2) the presence of the national currency allows the state to manage the course of affairs in the country's economy;

3) the national currency makes it possible to ensure the full sovereignty of the country, its independence from the will of the governments of other countries;

4) the presence of its own currency helps to avoid inflation, which "sick" the currencies of other countries.

To conduct international trade in the conditions of the existence of different currencies, mankind has created a mechanism for mutual settlements between citizens and firms of different countries. It is commonly referred to as the foreign exchange market.

The basis of this mechanism is the proportions of currency exchange, called exchange rates. Currency (exchange) rate - the price of one national monetary unit, expressed in monetary units of other countries. As in any market, these prices depend on the supply and demand for a particular currency. The magnitude of supply and demand in the foreign exchange market depends primarily on the volume of mutual trade between certain countries.

Thus, the main factor in the formation of exchange rates is the ratio of volumes of mutual exports and imports between different countries. In Russia, however, another factor influences the formation of foreign exchange rates - inflation. In 1992-1995 buying foreign currency (US dollars and German marks) became one of the main ways for Russians to save their savings from inflation, as the dollar was constantly growing (albeit lagging behind ruble inflation). By the beginning of 1995, the share of expenses for the purchase of foreign currency reached approximately 17% in the structure of Russian family expenses. Therefore, during these years in our country, the dollar exchange rate depended only to a small extent on mutual trade between Russia and the United States. In reality, this rate was the price of a very special product called "saving savings from inflation."

Fluctuations in exchange rates directly affect all citizens of the country, although they are not always immediately aware of it. The more a country is included in the international division of labor, the more actively it trades on the world market, the more the well-being of its citizens depends on the exchange rates of the national currency.

The price of a unit of foreign currency, expressed in national currency, is the exchange (exchange) rate.

The choice of the exchange rate system by any country, being the most important component of macroeconomic stability and economic growth, is determined by the level of development and size of the economy, the degree of its openness, the state of financial markets, the state of the balance of payments, the level of competitiveness, the amount of foreign exchange reserves, the degree of dependence of the economy on external trade, the socio-political climate in society, the state of the national monetary system, the nature and nature of the economic shocks faced by a particular country.

Thus, the exchange rate expresses the ratio between the monetary institutions of different countries. In general, the exchange rate system is a set of rules by which the role of the Central Bank in the foreign exchange market is described. Particular cases of systems are rigidly fixed exchange rates and absolutely flexible exchange rates, which are set in the foreign exchange markets without the intervention of the Central Bank. The exchange rate policy is an integral part of monetary policy and must be consistent with its main goal - reducing inflation.

The real exchange rate is the nominal exchange rate, recalculated taking into account the price dynamics in your country and in the country of foreign currency, i.e. the difference in inflation rates at home and abroad, according to the theory of purchasing power parity.

The real exchange rate has a characteristic effect on the rate of economic growth. An overvalued exchange rate has a negative impact on economic growth. The nominal exchange rate is the actual price of one currency in units of another currency, which is formed in this market.

LIST OF USED SOURCES

1. Pebro M. International economic, currency and financial relations. - M., 2005.

2. Economics / Ed. A.I. Arkhipova. - M.: Prospekt, 2003. - 546 p.

3. Economics / Ed. A.S. Bulatov. M.: BEK, 2006. - 604 p.

4. Miklashevskaya N.A., Kholopov A.V. International economy. - M.: BEK, 2007. - 532 p.

5. Kolesov V.P. International Economics: Textbook. - M.: INFRA-M, 2004.

6. World Economy: Textbook / Ed. A.S. Bulatov. - M.: Economist, 2005.

7. Lomakin V.K. World Economy: Textbook. - M.: UNITI, 2001.

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Economic relations between countries. The fundamental difference between an international transaction and a domestic one. Establishment of the rate of the national currency in foreign currency. Exchange (exchange) rate: concept, essence, meaning. Real exchange rate.

The exchange rate is the price of the monetary unit of a particular country, which is expressed in the amount of monetary units of any other country, in transactions of purchase and sale between these countries. That is, the exchange rate is the exchange rate of one currency for another, or, in other words, the price of a unit of one currency in units of another.

The exchange rate is determined by a number of factors. Some of them are listed below, on this page of our website.

1. The general level of prices in the countries participating in the exchange.
2. Expected inflation rates in the countries participating in the exchange.
3. The level of interest rates in the countries participating in the exchange.
4. The degree of trade relations that the governments of the countries participating in the exchange have for any political as well as economic considerations.

Countries participating in an exchange are two countries between which an exchange of some kind takes place. Particularly currency exchange.

There are several types of exchange rates. Some of them will be considered in more detail below, on this page.

Direct quotes. In most countries, as you know, exchange rates are expressed in the national currency of these countries. For example, in the Russian Federation, one US dollar will cost a certain number of rubles, for example, 30 rubles. A direct quote is a quote that shows how many units of one currency are contained in 1$.

Indirect quotes- these are quotes that show how many US dollars are contained in one unit of the national currency of a particular country. In particular, this type of exchange rate is used in Great Britain, whose national currency rate is higher than $.

Cross rates- this is such a ratio between the exchange rates of two countries, which follows from the exchange rate against any other country.

Spot rate- this is when the price of one unit of the currency of one country, expressed in the currency of any other country, is set at the time of any transaction with the participation of these countries. A prerequisite for such an exchange is that the exchange of currencies between counterparty banks is carried out on the second business day after the transaction has been concluded.

Classification of types of exchange rate.

Below, on this page of our information project on the Forex currency market, we will consider some criteria, as well as some types of exchange rates.

The types of exchange rates are divided according to the following criteria.

1. According to the method of fixation
2. By calculation method
3. By type of transactions
4. According to the method of establishment
5. In relation to parity
6. Accounting for inflation
7. By way of sale

In relation to the criteria listed above, the following types of exchange rates are distinguished.

1. Floating
2. Fixed
3. Mixed
4. Parity
5. Actual
6. Futures deals
7. Spot transactions
8. Swap transactions
9. Official
10. Unofficial
11. Overpriced
12. Understated
13. Parity
14. Purchase rate
15. Sell rate
16. Average course
17. Real
18. Nominal
19. Cash rate
20. Cashless sale rate
21. Wholesale exchange rate
22. Banknote

The main types of exchange rates have been listed above.