Becoming a Better You: A Guide to Self-Learning While Working Full-Time

General Business Articles

Concept of National Innovation Systems

International Business

Case Study: Henry Ford’s Contributions to Organizational Behavior and Leadership

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De Bono’s Six Thinking Hats: A Creative and Critical Thinking Model

Human Resource Management

What Is a Contact Center and Its Role in the Customer Journey?

General Business Articles

Eurocurrency Market

Prior to 1980 Eurocurrency markets are the only international financial market of any significance. They are offshore markets where financial institutions conduct transactions which are denominated in currencies of countries other than the country in which the institutions currencies of countries other than the country in which the institutions are located. The Eurocurrency market is outside the legal preview of the country in whose currency the finance are raised in the market. Eurocurrencies are bank deposits denominated in currencies other than the currency of the country in which the bank is located. The bank deposits and loans are denominated in Eurocurrencies, particularly dollars.… Read the rest

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Rangarajan Committee on Balance of Payments

Dr. C. Rangarajan, former Governor, Reserve Bank of India who headed the high level Committee on balance of payments submitted its report on June 4, 1993. The Committee made the following findings and recommendations for correcting balance of payments:

1. The Committee stressed the fact that a realistic exchange rate and a gradual relaxation of restrictions on current account transactions have to go hand in hand.

2. In the medium-term care has to be taken to ensure that there is no capital flight through liberalized windows of transactions under invisibles. At the same time there is no escape from a very close control overall capital transactions so that future liabilities are kept under control.… Read the rest

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Significance of Balance of Payments (BoP) Data

Balance of payment records all economic transactions between a county and the rest of the countries around the world annually. The balance of payment is made up of two distinguished components respectively the current account, capital and financial accounts. Transactions such as exports and imports of goods and services, income and transfers are recorded in the current account. On the other hand transactions relating to portfolio and foreign direct investments are recorded on the capital and financial accounts. Balance of payment is an important indicator of the health of any country’s business as it reflects its international trade and investment performance.… Read the rest

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The Capital Account component in Balance of Payments (BoP)

Capital account records public and private investment, and lending activities. It is the net change in foreign ownership of domestic assets. If foreign ownership of domestic assets has increased more quickly than domestic ownership of foreign assets in a given year, then the domestic country has a capital account surplus. On the other hand, if domestic ownership of foreign assets has increased more quickly than foreign ownership of domestic assets in a given year, then the domestic country has a capital account deficit. It is known as “financial account”. IMF manual lists out a large number of items under the capital account.… Read the rest

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The Current Account Component in Balance of Payments (BoP)

The Current Account Component

The Current Account records a nation’s total exports of goods, services and transfers, and its total imports of them. The current account is subdivided into two components (1) balance of trade (BoT), and (2) balance of invisibles (BOIs).

Structure of Current Account in India’s BOP Statement

A. CURRENT ACCOUNT

I. Merchandise (BOT): Trade Balance (A-B)

A. Exports, f.o.b.
B. Imports, c.i.f.

II. Invisibles (BOI): (a + b + c)

a. Services

i. Travel
ii. Transportation
iii. Insurance
iv. Govt. not elsewhere classified
v. Miscellaneous

b. Transfers

i. Official
ii. Private

c. Income

i. Investment Income
ii. Compensation to employees

Total Current Account = I + II

1.… Read the rest
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Translation Exposure Management in International Finance

Translation (accounting) exposure arises from the need to, for purposes of reporting and consolidation, to convert the financial statements of foreign operations from the local currency (LC) involved to the home currency (HC). If exchange rates have changed since the previous reporting period, this translation, or restatement, of those assets, liabilities, revenues, expenses, gains and losses that are denominated in foreign currencies will result in foreign exchange gains or losses.

The most common means of protecting against translation exposure is balance sheet hedging. This involves attempting equalize exposed assets and liabilities. For example, a company may try to reduce its foreign currency denominated assets if it fears a devaluation of the overseas currency, by running down cash balances, chasing debtors and reducing stock levels.… Read the rest

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