Currency Devaluation Research Articles

ДОЛАРИЗАЦІЯ ФІНАНСОВОГО РИНКУ УКРАЇНИ: ПРИЧИНИ, ЕВОЛЮЦІЯ, НАСЛІДКИ

The purpose of the article is to assess the level of domestic financial market dollarization, find out the causes of this economic phenomenon, trace its evolution and identify current features, substantiate proposals to minimize the negative consequences for the financial market and the economy in general. The methods of theoretical analysis, synthesis and generalization, analysis of statistical data and its graphical interpretation are used in the research. The results of the research showed that the main reasons for dollarization in Ukraine were high inflation and sharp fluctuations in the exchange rate of the national currency. In general, the dollarization of national financial markets occurs through the following channels: 1) borrowing on the international financial market; 2) the entrance of foreign banks to a domestic market; 3) investing abroad, when a national financial market is not sufficiently developed to create high-quality and highly liquid assets, dollarization provides rapid access to foreign financial assets and optimization of the profitability and risk structure of an investment portfolio; 4) the difference (spread) between interest rates in national and foreign currency. Based on the study of the domestic financial market, the following conclusions are made: 1) the level of Ukraine`s financial market dollarization in the aggregate and in terms of its separate segments is high; 2) this level poses a threat to the stable operation of financial intermediaries and the banking system in case of the national currency devaluation; 3) currency imbalance of assets and liabilities in the banking system has strongly decreased since 2008, but is still significant; 4) foreign currency is widely used by economic agents in the shadow sector of the economy. We consider the current dollarization level dangerous for the development of the country's financial system, and its reduction to a scientifically sound natural level should become one of the main tasks of the National Bank of Ukraine. Achieving the natural dollarization level and effective use of the domestic financial market potential will allow to intensify Ukraine's national economy development and promote integration into the international financial market and the global financial space.

Productive Sectors Most Affected in the Region of Arica and Parinacota by the COVID-19 Pandemic

High inflation rates, deep recessions, currency devaluations and historically low interest rates: all have been frequent phenomena in Latin America and Chile and could reappear permanently if monetary and fiscal policies are not properly managed. Macro and microeconomic stability is never fully assured in any economy, as was dramatically demonstrated in Chile after the 2019 social crisis and, even less so, with the current COVID-19 pandemic, where, despite all efforts, economic stability is still not sufficiently entrenched to quickly exit the crisis (Barra, 2021). Most of the industries or sectors that suffered large declines in Chile are commerce, restaurants, hotels, artistic and cultural services, and transportation companies. Simulations and statistics suggest that the largest negative concentrations are found among entrepreneurs and small businesses. As suggested by the first National COVID-19 Survey, conducted in the Arica and Parinacota region by the Labor Observatory of SENCE (2020), in the context of the health crisis, the “hotel, restaurant and commerce” sectors are the most affected by the pandemic in the region.

THE IMPACT OF EXCHANGE RATE VOLATILITY ON ECONOMIC GROWTH IN NIGERIA: A DYNAMIC ECONOMETRIC APPROACH

This study examined the impact of exchange rate volatility on economic growth in Nigeria. The study covers the period of 1986 to 2019. Using time series data, the methodology adopted is the Vector Error Correction Mechanism to explore the impact of exchange rate volatility on the selected macroeconomic variables. The result indicated that exchange rate volatility has a significant impact on economic growth, specifically it has a positive impact on inflation, unemployment and balance of trade. On the other hand it has a negative impact on economic growth and investment. The recommendations made include; that relevant authorities should try to avoid systematic currency devaluations in order to maintain exchange rate volatility at a rate that allows adjustment of the balance of payments.

Ukraine's metallurgical industry: output dynamics through the prism of external factors

Domestic metallurgical industry is an integral part of the world industry, and its development takes place in the context of global trends, such as constant growth of metallurgical production with simultaneous excess of smelting, increasing concentration of production, and increasing consumption and export of metal products in TOP-15 leading smelting countries. The main consequence of such trends is a significant intensification of competition on the global steel market. Despite the fact, that Ukraine's metallurgical industry is an important participant in the global market of ferrous metals and raw materials for their production and has certain advantages in their production and export, like the whole Ukraine's economy, is open and small in macroeconomic terms. This gives grounds to refer Ukraine's metallurgical industry of to the category of "small open industry", which is characterized by export orientation, a small share of output in global output, exports, imports, and domestic consumption and, most importantly – by the lack of decisive influence on world prices. Since Ukraine's metallurgical industry is small and open, and the vast majority of its products are shipped to world markets, it was suggested that the dynamics of metallurgical output is directly influenced by external factors such as world steel prices, the hryvnia exchange rate and the price for natural gas. The obtained results confirmed the hypothesis that Ukraine's metallurgical industry throughout the entire study period was completely dependent on the action of external factors. In particular, the favorable price situation on the global market of metal products ensured a high dynamics of metallurgical output. At the same time, devaluation of Ukrainian national currency in different periods had different effects. The price for natural gas restrained the metallurgical output throughout the entire study period.

AN ASSESSMENT TO THE COVID-19 IMPACT ON THE CURRENT PRODUCTION GLUT IN THE CONSTRUCTION SECTOR: EGYPTIAN CASE

The real estate and construction sector is a lucrative activity to attract investment on both the internationally and national level. The secret behind continuous investment refer to the other tradable sector which still not competitive and the return of investment is still provide marginal benefit. A status quo accelerates the currency devaluation – especially in countries that are facing trade deficit – the devaluation of the currency has been a common phenomenon during the past sixty years and the real estate present an attractive pool to keep the value of human wealth. In countries that are characterized by increasing the population growth rate consequently the demand for housing pushes the government towards developing new cities and a new capital to absorb the demand. In Egypt the governments built new governorates to absorb the notable increase in the number of population from the centre of the delta to new sites. This strategy helps in, creating new jobs, in order to be able to fulfil the increase in population thus decreasing the crowding effect and minimize wasting resources and opening new opportunities. This paper attempts to analyse the demand and supply side key drivers for steel and cement industry. It investigates how these industries will sustain despite the oversupply status. The current situation presents a future challenge and the paper argue is this sector is going to face market failure. Furthermore, the paper highlight the possible opportunities under the current challenges and assessing the role of the government’s regulations and policies after the recent economic reform and provide possible solutions to keep these industries sustainable.

THE ONLINE TEACHING VIS-À-VIS THE CLASSROOM TEACHING (ON THE BACKGROUND OF COVID-19)

The history of mankind will depict 2020 as the beginning of the new era – the era of the pandemic, which has invaded the world countries. The life on the earth has changed drastically. A partial or complete lockdown, numerous infected citizens, an increasing economic crisis, devaluation of a national currency, paralyzed cultural and social lives – this is a partial list of the challenges faced by the majority of the world countries that have made efforts to survive. The paper depicts the challenges of Georgia’s educational space in the environment of the pandemic. The major emphasis is put on the transition from a classroom teaching to an online lecturing as well as on the (dis)advantages of a face-to-face interaction and a virtual communication. Moreover, the paper presents some strategies of the “peaceful” transition (creation of a student-oriented virtual-classroom atmosphere, timely informativeness, usage of appropriate technological means, replacement of written-type exams with hybrid-type examinations, flexible site-oriented means of an extracurricular communication, updated criteria of assessment, etc.) elaborated at the Faculty of Humanities of Ivane Javakhishvili Tbilisi State University. The methodology of research includes observation, analysis and evaluation of the recent processes.

The archaeology of a marginal neighborhood in Tehran, Iran: garbage, class, and identity

ABSTRACT Tehran’s Archaeology of Garbage project was conducted in 2017–2018 and with the initial aim of monitoring the impacts of currency devaluation on poor people. In Districts 7 and 17, the team investigated two of the most decayed urban fabrics of Tehran as well as the garbage bags of 1004 poor marginalized families. Among these, we managed to find evidence of a forgotten social group, the ‘impoverished middle class’ which consisted of people from the middle-class background who had to move to a neighborhood occupied by low-income classes. The garbage-making behaviors of these two communities were tracked and led to a better understanding of demographic changes and recent protests. In this article, I will present the evidence of poverty in District 17 and will open a new debate on the poor middle-class emerging community and its influence on the new identity of the people living in District 17.

Comparative Studies on Development Strategies of Korea, Vietnam and China in the Economic Take-Off Period

This article conducts a series of comparison of development scenarios and development strategies among Korea, Vietnam and the mainland China. The research finds that although the take-off periods differ for the three countries there are some similarities in the strategies and successes they achieved on their way to economic growth and development. As to development strategies, China depends less on foreign capital than Korea and Vietnam. The contribution of exports and trade is great in the three countries, which is spurred by devaluation of local currency and stable exchange rates. A typical feature of China’s development strategies which does not apply to Korea and Vietnam is the pursuit of current account surplus.

Steadiness of expectation theory measured by swaption curve

The financial crisis that broke out in mid-2007 has spread in the existing financial system with great instability favoring the devaluation of currencies with the fall in market interest rates. This has caused potential investors to become more risk-averse and therefore, look for financial products, although lower profitability, also poses less risk. Following this line, it is the Fixed Income assets that have acquired greater prominence in these times of crisis. This article highlights the strength of the expectation theory in different tranches, using EURIBOR rate to determine implicit forwards, and estimate the price of a one-year swap contract with 3 months of maturity, and comparing in every moment with the real prices of swap as a benchmark. SWAP is the bigger derivative inside of the group of Fixed Income Assets. After the quantitative analyst, it has been observed how the theory prevails of sceneries of low volatility but falls on sceneries when the volatility starts to increase. Introduction. One of the basic assumptions about financial theory is talking about the expectations theory. Since the middle of the eighties, this theory has been used as the unbiased estimator to calculate the swap interest rate in the base of the spot bank interest rate. Aim. Quantitativa analyst of the steadiness of expectations theory in differents economical cycles, using the European Central bank as the source to get hold of the EURIBOR spot rates for 3 months, 6 months, 9 months, and 12months from 2004 to 2016. Results. During the periods before the crisis 2007, the prices of the IRSWAP are almost adjusted between the market and what the financial theory says. The situation starts to change after the financial crisis when the volatility of the market starts to increase due to the instability of the banking sector and traders started with speculations strategies forgetting the aim of hedging, operating, new positions the majority in the short term. Conclusion. Whether for speculative reason or interventions actions of the monetary authority, the theory e “EXPECTATIONS THEORY”, it is not an efficient predictor with out using a premium risk, during the periods of high volatility.

Analyzing the dynamics of indicators of the Russian economy

Subject. The article addresses the dynamics of the Russian economy indicators. Objectives. The aim is to identify sources and opportunities for the Russian economy growth. Methods. The study rests on the systems approach, using methods of statistical, neural network, and cluster analysis. Results. The analysis of the currency, stock, and commodity market unveils the impulse effect on the MOEX index through the devaluation of the national currency and the issue of Russian Government Bonds. The analysis of the importance of GDP deflator by industry identifies the priority of economic activity ‘public administration and military security; social security’, which suppresses the economic activity ‘household activities as employers; undifferentiated activities of households to produce goods and provide services for their own consumption’. The structural integrity of economic activities is maintained through taxes on products. The dynamics of the share of GDP deflator growth and the index of output of goods and services revealed a low level of purchasing power and a rise in food inflation, as well as a significant upturn in inflation in the manufacturing sector after Q1 2020, which was caused by the increase in the cost of production and unit sales. Conclusions. The analyzed trends in the Russian economy indicators show a qualitative source of growth of the Russian economy, i.e. ‘people as an alternative oil’. This enables to move away from commodity dependence (RTSI) and actively use wide opportunities of growth (IMOEX).

The Empirical Evidence of the EU–Russia Failed Strategic Partnership: Did it have a Positive Impact on Bilateral Trade?

Many observers were casting doubts about the existence of a strategic partnership between Russia and the European Union long before the annexation of Crimea and the subsequent strained relations between the two blocs. Nevertheless, the main challenge of this article is to prove that there was indeed a positive effect regarding the strategic partnership on bilateral trading – together with such factors as the growth of the Russian and EU GDPs per capita, the devaluation of the Russian currency and the oil price increase – by applying the Gravity Model. Based on this model, it was also confirmed that there was a negative effect of the geographical distance and sanctions between parties on the EU–Russia trade flow. Moreover, we tried to predict by means of the Error Correction Models how EU–Russia bilateral trade would have changed according to a scenario wherein the parties continued being strategic partners, and had the sanctions not been imposed. As such, and by the method described, not only was it empirically confirmed that the major partners would have received the most benefit from the strategic partnership with Russia but even Russia’s smaller trading partners are incurring significant welfare losses from sanctions, along with Russia itself.

Металургійна галузь України: динаміка виробництва крізь призму зовнішніх факторів

Domestic metallurgical industry is an integral part of the world industry, and its development takes place in the context of global trends, such as constant growth of metallurgical production with simultaneous excess of smelting, increasing concentration of production, and increasing consumption and export of metal products in TOP-15 leading smelting countries. The main consequence of such trends is a significant intensification of competition on the global steel market. Despite the fact, that Ukraine’s metallurgical industry is an important participant in the global market of ferrous metals and raw materials for their production and has certain advantages in their production and export, like the whole Ukraine’s economy, is open and small in macroeconomic terms. This gives grounds to refer Ukraine’s metallurgical industry of to the category of "small open industry", which is characterized by export orientation, a small share of output in global output, exports, imports, and domestic consumption and, most importantly – by the lack of decisive influence on world prices. Since Ukraine’s metallurgical industry is small and open, and the vast majority of its products are shipped to world markets, it was suggested that the dynamics of metallurgical output is directly influenced by external factors such as world steel prices, the hryvnia exchange rate and the price for natural gas. The obtained results confirmed the hypothesis that Ukraine’s metallurgical industry throughout the entire study period was completely dependent on the action of external factors. In particular, the favorable price situation on the global market of metal products ensured a high dynamics of metallurgical output. At the same time, devaluation of Ukrainian national currency in different periods had different effects. The price for natural gas restrained the metallurgical output throughout the entire study period.

IS THERE J-CURVE EFFECT IN THE TRADE BETWEEN PAKISTAN AND UNITED KINGDOM? ASYMMETRIC EVIDENCE FROM INDUSTRY LEVEL DATA

Pakistan is a country which is facing chronic trade deficit since its independence and currency devaluation have always remained an effective strategy to bridge this gap between imports and exports. Previous studies which assessed the influence of changes in exchange rate on Pakistan’s trade balance followed a symmetric or linear approach. However, in this study we adopt an asymmetric approach, according to which appreciations and depreciations have asymmetric effects on the trade balance of Pakistan. Using commodity trade data of 28 (2-digits) industries that trade between Pakistan and United Kingdom, we find pattern of the J-curve in nine industries when a linear model was estimated. However, when we estimated a nonlinear model, the concept of asymmetric J-curve was supported in 14 industries. The largest industry (clothing) which engages in 36.5% of the trade was found to benefit from rupee depreciation.

Real Exchange Rate and Manufacturing Performance in Nigeria

The efficacy of currency devaluation to improve output in Nigeria is under debate, and coupled with an unsatisfactory result in the behaviour of the manufacturing sector performance regenerated interest of this study to investigate the impact of exchange rate on output and employment in the sector. The work uses Structural Vector Autoregression, ECM and Canonical Co-integrating Regression to examine the shock effect, short and long-run elasticities of exchange rate on the manufacturing performance. While employment and output are used as a proxy for manufacturing sector performance. The findings show that changes in the exchange rate are fairly elastic with output and employment both in short and long-run. However, changes in the exchange rate are insignificant with employment in the short run. The variance decomposition form the SVAR shows that forecast error shock of the exchange rate is more prolong on employment than output. Consequently, the result of the estimation of the Impulse Response Function from the Monte Carlos shows that one standard deviation of the exchange shock adversely affect employment. The outcome of the result indicates that the Nigerian exchange rate has not improved output and employment in the manufacturing sector. Several factors may be accounted for this, although, it may be due to cost-push inflationary pressure and unfavourable competitiveness. The study suggests the need to encourage long-term supply-side policies among others to improve the situation.
 
 Received: 7 June 2020 / Accepted: 9 January 2021 / Published: 5 March 2021

The state of global public debt and new approaches towards debt management

This article is devoted to the state of public global public debt and new approaches towards its regulation in both developed and developing countries. The subject of this research is public debt in different groups of countries. Analysis of the situation with global public debt and the peculiarities of its regulation is necessary to learn positive foreign experience for its possible application in Russia. The following factors of significant increase of public debt are outlined: severe reduction of economic activity and decline in government revenue; increase of public spending, including related to anti-crisis measures; growing primary deficit, and this, the need to increase borrowings. The countries with low and middle income additionally face significant capital outflows from their financial markets, devaluation of national currencies, and difficulties with debt refinancing. Analysis is conducted on the structure and dynamics of public debt that developed due to the COVID-19 pandemic. The author describes the risks associated with public debt. It is noted that many developed countries were able to adjust their financial operations in response to the growing need for borrowed funds: change the existing mechanisms for entering the debt market; amend the practice of conducting auctions government securities auctions. Developing countries need debt restructuring. The conclusion is made that the debt relief process requires new approaches towards debt management, including new methods of risk mitigation, enhanced control aimed at countering “credit bubbles”; clear regulation of debt restructuring observed by all creditors.

Redenomination of Naira: A Strategy for Inflationary Reduction

The paper examined redenomination of naira currency as a strategy for reducing inflation rate in Nigeria. The pressure of currency devaluation mounted on the developing nation’s currency by the developed nations as a condition for loans and grants in the past drastically reduced the value of their currency which in turn increase inflationary pressure on the developing economies. To obtain Nigerians view on redenomination of the naira, the study used Primary data source of data collection to collect data from Nigerians who understands what redenomination is all about. Questionnaire was distributed to 153 respondents. The data obtained from them was analyzed using simple percentage method. The study found that redenomination of naira can reduce inflation rate, improve the value of naira and can be used by CBN to reduce the quantity of money in circulation. The study recommends that Nigerian government should reconsider her stand on the suspension of redenomination of naira as proposed by the CBN in 2007 so as to reduce inflationary pressure mounted on the value of the naira and the economy by the devastated effect of covid-19, government should make concerted effort to stabilize the value of the naira by introducing economic recovery reforms such as support to small and medium enterprises, provision of infrastructure, job creation, export promotion and creating enabling environment for economy to grow and that implementation of redenomination has to be done in a way that its associated uncertainties and instabilities are minimized and macro-economic benefits maximized.

The policies that can be implemented to stop the value of UZB som from falling.

The objective of this paper is to analyze any details about currency devaluation in Uzbekistan. In particular, it tries to analyze possible reasons why the government of Uzbekistan depreciated its national currency Som(UZS) and the goals of the government from devaluating Som. The methodology also offers findings positive and negative impacts caused by the depreciation of Som.

УПРАВЛІННЯ ДЕТЕРМІНАНТАМИ КОНКУРЕНТНОЇ ДЕВАЛЬВАЦІЇ: ТЕОРЕТИЧНІ ТА ПРАКТИЧНІ АСПЕКТИ

Анотація. Присвячено дослідженню теоретичних і практичних аспектів управління детермінантами конкурентної девальвації, зокрема її сутності, інструментів її реалізації, а також позитивним і негативним наслідкам її впливу на економіку країни, яка її реалізує, і торговельних партнерів цієї країни. Визначено, що конкурентна девальвація є навмисною девальвацією валюти, ініційованою (і офіційно, і неофіційно) центральним банком з метою зниження вартості експортних товарів для іноземних покупців, таким чином сприяючи розвиткові внутрішнього виробництва, розв’язанню проблеми безробіття i зниженню дефіциту платіжного балансу. Визначено, що найбільш відчутно вплив конкурентної девальвації проявляється в таких секторах економіки країни: зовнішньоторговельний, промисловий, аграрний, фінансовий і сектор послуг. У результаті дослідження встановлено, що ступінь ефективності конкурентної девальвації для стимулювання економічного зростання країни детермінується такими факторами: структура зовнішньої торгівлі, частка імпортованої сировини і комплектуючих у вартості готової продукції, зовнішньоторговельні барʼєри, темпи економічного зростання в інших країнах, еластичність попиту на експортну продукцію, поширеність фіксованих контрактів на сировину та інструментів хеджування ризиків, ефект J-кривої. Виокремлено позитивні і негативні наслідки конкурентної девальвації для країни, яка її реалізує, та її торговельних партнерів. Очікуваними позитивними результатами для країни, що девальвує свою валюту, є зростання обсягів експорту і підвищення внутрішнього попиту, що повинно сприяти вищому рівню зайнятості та економічному зростанню. Серед негативних наслідків конкурентної девальвації такі: зниження купівельної спроможності населення, здорожчання імпорту і зменшення його обсягів, зростання рівня інфляції; зростання вартості обслуговування боргів, номінованих в іноземній валюті; зниження обсягів іноземних інвестицій; стримування науково-технічного розвитку та відплив висококваліфікованої робочої сили за кордон. Ключові слова: конкурентна девальвація, валютна війна, валютний демпінг, економічна політика, економічне зростання. Формул: 0; рис.: 2; табл.: 0; бібл.: 31.

Beirut, Lebanon

We are psychiatrists based at the American University of Beirut Medical Center, one of the largest psychiatric departments in Lebanon. Since October, 2019, Lebanon has navigated through several crises. It started with unremitting political unrest, national bankruptcy, and currency devaluation. The COVID-19 pandemic complicated the situation by stretching the health-care system to its limits. Our ordeal would culminate with one of the largest non-nuclear explosions in history.

КОРУПЦІЙНІ РИЗИКИ В БАНКІВСЬКІЙ ДІЯЛЬНОСТІ

Зазначено, що для України проблема протидії корупції сьогодні постає все жорсткіше та гостріше, оскільки відповідно до Угоди про асоціацію між Україною, з однієї сторони, та Європейським Союзом, Європейським Співтовариством з атомної енергії і їхніми державами-членами, з другої сторони, наша держава зобов’язалась її побороти.
 Зроблено висновок, що одним із основних напрямів у сфері запобігання корупції є виявлення корупційних ризиків. Корупційні ризики постійно досліджують науковці та громадські організації в різних сферах, у тому числі й у банківській.
 Досліджено наявні підходи до визначення поняття «корупційний ризик» і аргументовано, що більшість досліджень учених присвячені розглядові перш за все сутності економічного ризику, визначенню факторів і причин його виникнення, характеристиці методів оцінки ступеня ризику, а не самому корупційному ризику.
 Зауважено, що сьогодні банківський сектор України перебуває у складному становищі, що зумовлено нестабільною економічною та політичною ситуацією, воєнними діями на території України, значним рівнем інфляції та девальвацією національної валюти. Наслідками програми оздоровлення банківської системи Національного банку України стало суттєве зменшення кількості банків і переважання частки державних банків у активах банківської системи.
 На підставі аналізу Антикорупційної програми Національного банку України на 2018—2019 роки, затвердженої Рішенням Правління Національного банку та погодженої з Національним агентством з питань запобігання корупції, визначено можливі корупційні ризики в банківській діяльності та класифіковано їх на внутрішні (організаційно-управлінські, фінансово-господарські, кадрові, юридичні процедури діяльності банку) і зовнішні (діяльність ділових партнерів, у тому числі й органів державної влади, органів місцевого самоврядування, з якими банк перебуває у ділових стосунках).
 Зазначено недоліки в Антикорупційній програмі Акціонерного товариства «Альфа-Банк» Версія 3.00, затвердженої рішенням Наглядової ради № 18 від 29.03.2019, та запропоновано внесення змін до неї з урахуванням змін в антикорупційному законодавстві.
 Перспективними напрямами досліджень корупційних ризиків у банківській діяльності визначено питання механізмів оцінки корупційних ризиків у банківській діяльності, а також діяльність Уповноваженої особи з питань протидії корупції в банку.