FIN 406 Saudi Electronic University Foreign Exchange Market Case Study Questions
Description
Required TextsMoffett, M., Stonehill, A., & Eiteman, D. (2012). Fundamentals of multinational finance (4th). Boston, MA: Prentice Hall. ISBN: 9780132138079 (print), 9780132138161 (e-text).International Trade Finance
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1. Over the last few decades, the size of the foreign exchange market has increased
significantly. Explain in detail the factors that have fuelled this growth. Why is
the US dollaràmost widely used quotation currency in foreign exchange
markets?
2. Saudi Arabia has recently increased its degree of openness; hence it engaged in a
higher level of international (financial & non-financial) activities. Briefly discuss
the following along with providing one example:
?
How would this affect our economy?
?
How would this affect our BoP? Current account & financial account.
?
How would this affect our exchange rate?
Since it is pegged exchange rate regime, increasing the level of international trade will
affect the exchange rate, so how would the Saudi Central Bank react to this?
3. The International Monetary Fund (IMF) regularly publishes its assessment of the
prospects for the world economy. Use the IMFàcurrent analysis to form your
expectations of its immediate economic prospects in Saudi Arabia. IMF
Economic Outlook: www.imf.org/external/
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