Exchange rates and foreign investment
14/3/2018 12:00 am
Bitter melon meek *
Under the current system of globalization in all countries of the world, and the bulk of global trade liberalization, and the movement of funds and global currencies between nations of the world were associated with world trade movement between States, became second term proposed power plant and facilities for these activities and has been linked to the yield equation Risk, capital became moving between countries for investment, thus there became known as foreign investment.
The main risk on investment is called foreign exchange rate in the world, for that matter, the foreign investor is guaranteed not to lose as a result of the instability of the exchange rate (which is called by the evaporation of the actual value of the coin) and therefore non-operational losses to income or assets As a result of the decline in currency exchange rates.
It is also known that the exchange rate is the rate at which foreign exchange swap gets which national currencies (local), a monetary unit turnover units of local currency to another.
Exchange price is related in any direct State reserves of foreign currencies, and thus relates closely to the size of export activity to any country (for foreign currency revenue).
To balance the BOP (balance of foreign trade, the balance of current transactions) are very important, a deficit in the balance of trade necessarily lead to a lower exchange rate, therefore the exchange rate stability is linked to exports of any State of the world's export trade and thus supplementing her income. Of foreign currencies which are available at any one time.
This stability leads to stability in production inputs and products, and also reduce inflation and stable interest rates. It has a direct impact on the profitability of export industries and the cost of imported resources.
Here it is important to make the stability of the exchange rate foreign trade adjustment tool for larger size attracts foreign direct investment, because global investors reassurance on their capital assets and the risk of corrosion is the Chief attraction and important of these investments, and also the length of Possible investment.
However, we must also take into account that the exchange rate is not a tool independent of other factors in the economy but to be coherence of macroeconomic policies with each other, and the need for continued work on guiding the exchange rate to a uniform price between regular market market Alternate universe.
* President of the Association of Iraqi private banks