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Exchange Rate System The country of choice is Ukraine. Ukraine was chosen because of its interesting political, social, and economical changes the country experienced during the last year. According to web the currency exchange rate is 100, 000 US Dollar = 525, 200 Ukraine Hryvnia (as per Wednesday, July 19, 2006). Median price = 4. 80515 / 5. 25200 (bid / ask ) Minimum price = 4. 78760 / 5. 23490 Maximum price = 4. 80710 / 5. 25390 We have invested an imaginary $ 100, 000 in Ukrainian currency. $ 100, 000 in Ukrainian currency equals 525, 200 Ukraine Hryvnias (UAH). Lets examine rate developments of this currency during the past twelve months using the table from web Conversion Table: USD to UAH (Interbank rate) (Time period: 07 / 19 / 05 to 07 / 19 / 06) Time Period
Average
High
Low
07 / 19 / 05 to 07 / 19 / 06
5. 03521
5. 03000
4. 76180
08 / 19 / 05 to 09 / 19 / 05
5. 00907
5. 01000
4. 78770
09 / 19 / 05 to 10 / 19 / 05
5. 04397
5. 08700
4. 78770
10 / 19 / 05 to 11 / 19 / 05
5. 03670
5. 05400
5. 00000
11 / 19 / 05 to 12 / 19 / 05
5. 05032
5. 04500
4. 78100
12 / 19 / 05 to 01 / 19 / 06
5. 08069
5. 15300
4. 78950
01 / 19 / 06 to 02 / 19 / 06
5. 13293
5. 19000
4. 78830
02 / 19 / 06 to 03 / 19 / 06
5. 12417
5. 06350
4. 78830
03 / 19 / 06 to 04 / 19 / 06
5. 26268
5. 06500
4. 79120
04 / 19 / 06 to 05 / 19 / 06
5. 25103
4. 86830
4. 75990
05 / 19 / 06 to 06 / 19 / 06
5. 24203
4. 85350
4. 76360
06 / 19 / 06 to 07 / 19 / 06
5. 23547
4. 84820
4. 73720 How to read this table: Each daily rate is the average ASK price for the day. The AVERAGE rate is the average of all the ASK prices for the given time period.
The HIGH rate is the highest BID rate for the given time period. The LOW rate is the lowest BID rate for the given time period (Oanda. com Website n. p. ) Due to unstable political situation the currency of Ukraine faces critical days. Although the National Bank of Ukraine claims that inflation continues to decrease (according to the information from National Bank of Ukraine Website the tempo of consumer inflation reduced to 6. 8 % in comparison to 7. 3 % (May 2005). Inflation reached its peak in August 2005 (14. 9 %).
However, the National Bank of Ukraine claims that inflation doesnt impose any threat to the population of Ukraine. Inflation for the period of January-June 2006 has reached 2. 9 %. The prognosis for Ukrainian currency is quite difficult to predict. Obviously it will depend on several social, political, and economical factors the perspectives of which are quite indefinite. Some of the factors include: prices for energy carriers, the future of Ukrainian export of metal within the context of PR company, started by Moscow concerning the radioactivity of Ukrainian metal production. Moscow economists and politicians claim that the Ukrainian metal is made of radioactive Chernobyl scrap metal.
Other factors include the continuation of continuous conflicts in Verchovnaya Rada, awful condition of foreign market of shares, to mention a few. Despite of such unfavorable prognosis, the position of dollar will be quite strong. The rate of USD will not increase considerably as stability creates favorable conditions for the development of Ukrainian economy. In case the UAH will strengthen its positions considerably, the export will be influenced negatively. At the same time, the extreme in other measures can cause exchange devaluation panics.
Answers. com Website examine different types of exchange rate system such as floating, fixed, pegged, etc. According to the article, fixed exchange rate (pegged exchange rate) is matched to the value of another single currency or to a basket of other currencies, or to another measure of value such as gold (n. p. ) and has its aim to maintain a countrys currency value within a very narrow band. The fixed rate aids the government to maintain low inflation and provides greater certainty for exporters and importers (n. p. ).
Floating exchange rate is an opposite to a fixed exchange rate system. Ukraine has exchange agreements involving more than one market. However, the currency is closely connected to the USD rate exchange and is defined as fixed exchange rate. Bibliography Answers. com. Fixed Exchange Rate.
Retrieved July 19, 2006. web Application 1. The dynamics of 1 USD/ 1 UAH (FOREX) (Finance. ua Website) 10. 04. 2006 - 19. 07. 2006
04. 2006
10
4. 8667
19
4. 8345
25
4. 8268
11
4. 8611
20
4. 8353
26
4. 8013
12
4. 8611
21
4. 8351
27
4. 8030
13
4. 8321
22
4. 8254
28
4. 7998
14
4. 8293
23
4. 8133
29
4. 7944
18
4. 8191
24
4. 8215
30
4. 7605
05. 2006
01
4. 7605
13
5. 1130
24
5. 1410
02
4. 7605
14
5. 1143
25
5. 1508
03
5. 0973
15
5. 1034
26
5. 1279
04
5. 0830
16
5. 1062
27
5. 1531
05
5. 0376
17
5. 1152
28
5. 1523
06
5. 1202
18
5. 1712
29
5. 1590
09
5. 1335
19
5. 0954
30
5. 1314
10
5. 1065
20
5. 1164
31
5. 1282
11
5. 0826
21
5. 1258
12
5. 0498
22
5. 0971
06. 2006
01
5. 1185
11
5. 0932
22
5. 0656
02
5. 0888
12
5. 1014
23
5. 0882
03
5. 0674
13
5. 0945
24
5. 1031
04
5. 0670
14
5. 0936
25
5. 1052
05
5. 0637
15
5. 0819
26
5. 1059
06
5. 0739
17
5. 0879
27
5. 0850
08
5. 0977
18
5. 0952
28
5. 0939
09
5. 1258
19
5. 0852
29
5. 1055
10
5. 0927
20
5. 0883
07. 2006
01
5. 0528
07
5. 0970
13
5. 1045
02
5. 0577
08
5. 0797
14
5. 1042
03
5. 0545
09
5. 0797
15
5. 1144
04
5. 0938
10
5. 0838
16
5. 1186
05
5. 1242
11
5. 1037
18
5. 0876
06
5. 1418
12
5. 0932
19
5. 1246
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