Four Salient Facts about the Chinese Yuan

© 2017 Farok J. Contractor, Rutgers Business School On February 23, 2017, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing's foreign exchange practices, President Donald Trump declared: "Well...I think they're grand champions at manipulation of currency. So I haven't held back.... We'll see what happens."  — Reuters Four Salient Facts: … Continue reading Four Salient Facts about the Chinese Yuan

Update: Is China a “currency manipulator”? Donald Trump says so

© 2016 Prof. Farok J. Contractor, Rutgers Business School This article is a 2016 update of a post published on November 16, 2015. It has also been published on The Conversation as “Does China manipulate its currency as Donald Trump claims?” on June 13, 2016. Subsequently, it was also picked up by USNews.com on June 22, 2016, as “Does … Continue reading Update: Is China a “currency manipulator”? Donald Trump says so

IMF Elevates Yuan to Elite Currency Status: So what?

© 2015 Prof. Farok J. Contractor, Rutgers University Governor of the People’s Bank of China (China’s central bank) since 2002 and a cautious and methodical bureaucrat, Zhou is the essence of his country’s Mandarin class: canny and understated, but relentless in his objective to elevate China’s economy and currency to elite status. Under Zhou’s watch, China’s exports … Continue reading IMF Elevates Yuan to Elite Currency Status: So what?

Is China a “currency manipulator”? Donald Trump says so

© 2015 Prof. Farok J. Contractor, Rutgers University After 20 years, the Chinese government must be used to it—being bashed by US politicians and Congress as a “currency manipulator.” Indeed, the exchange value of the yuan (or renminbi [RMB]) is fixed each morning by its central bank, the People’s Bank of China (PBoC), with a … Continue reading Is China a “currency manipulator”? Donald Trump says so

Capital Outflows from China and the Hidden Story in China’s FDI Statistics

© 2015 Prof. Farok J. Contractor, Rutgers University Permission to Reproduce: A version of this post was published as  “The Chinese prefer investing overseas; dummy companies may ease transfers and devalue renminbi” by  YaleGlobal Online, September 10, 2015; it was the number-one story in a Google search for “China FDI” that day and is also available as a  podcast. The global panic … Continue reading Capital Outflows from China and the Hidden Story in China’s FDI Statistics

Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part C– Epilogue)

© 2015 Prof. Farok J. Contractor, Rutgers University CASE STUDY (C)—EPILOGUE: The Negotiated Settlement The two case studies presented examine foreign exchange risk from two perspectives: (Part A) An American couple has put a down payment on a lovely new condo in Puerto Vallarta, agreeing to pay 5,000,000 Mexican pesos on delivery of the condo in 12 months.  (Part … Continue reading Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part C– Epilogue)

Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part B)

© 2015 Prof. Farok J. Contractor, Rutgers University CASE STUDY (B): The Mexican Sellers’ Perspective The two case studies presented examine foreign exchange risk from two perspectives: (Part A) An American couple has put a down payment on a lovely new condo in Puerto Vallarta, agreeing to pay 5,000,000 Mexican pesos on delivery of the condo … Continue reading Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part B)

Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part A)

© 2015 Prof. Farok J. Contractor, Rutgers CASE STUDY (A): The American Buyers’ Perspective The two case studies presented examine foreign exchange risk from two perspectives: (Part A) An American couple has put a down payment on a lovely new condo in Puerto Vallarta, agreeing to pay 5,000,000 Mexican pesos on delivery of the condo in 12 months. ... CONTINUED … Continue reading Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part A)

Why a Single Currency Works in the US, but Not Very Well in Europe: Three Minimal Conditions for the Eurozone to Function

© 2015 Prof. Farok J. Contractor, Rutgers University America has been using a single currency since 1793, when the United States Mint in Philadelphia first began issuing US dollar coins. However, it is not the longevity of a currency that determines whether it succeeds, but institutional mechanisms. Such mechanisms are weak or lacking in Europe. … Continue reading Why a Single Currency Works in the US, but Not Very Well in Europe: Three Minimal Conditions for the Eurozone to Function

Is China set to become the world’s largest economy in 2015?

© 2015 Prof. Farok J. Contractor, Rutgers University The business press has been excitedly predicting the day when the Chinese economy will surpass that of the US in size. Just when this will happen has been a matter for debate—estimates have ranged from 2016 to 2025. In order to compare a nation’s economic size to that of … Continue reading Is China set to become the world’s largest economy in 2015?