Treasury and risk management Essay Example | Topics and Well Written Essays - 1000 words

Treasury and risk management - Essay Example Therefore, China is pursuing a weak currency policy in order to boost demand for Chinese exports. The large current account surplus in China is the indication that China’s currency is undervalued (Pettinger, 2011, p.1). The reason behind holding the value of Yuan is to compensate for its economic weakness. Its weak currency policy makes Chinese goods cheap compared with those of global competitors in Europe and Japan for instance. Since 1996, China has maintained a same fixed exchange rate resulting in an enormous increase in foreign exchange reserves. This enormous increase will be fuelled by Yuan that is estimated to be undervalued against the dollar. The benefit which it is getting by holding the value of Yuan is that it is selling more goods in foreign countries i.e. trade surplus (Cohen, p.1). Another benefit is that its capital market is becoming attractive to investors. If the successful internationalization of the Yuan will be possible then it will also be the internat ional currency (Cohen, 2011, p.1). Evidence Suggesting Weak Currency Policy of China It has undervalued the price of its currencies in order to keep its currency policy weak in order to boost export and enjoy trade surplus. Its weak currency policy in relation to US Dollar enables them to buy dollar from the open market in order to keep the demand for dollars high. It drives the dollar price upward in relation to Yuan. The large account surplus in China is the evidence for its weak currency policy (Cksd, 2012, p.77). There are some negative aspects towards the weak currency policy of China. By depending more on exports and foreign direct investment inflows made China particularly weak towards the effects of the global economic slowdown. A weak currency policy i.e. undervalued currency makes import more expensive, thereby throbbing Chinese firms that import raw materials and machinery (Morrison and Labonte, 2011, p.22). A huge rise in China’s foreign exchange reserves in recen t years is also the evidence that the Chinese Government has been holding its currency down in order to make weak currency policy (Shapiro, 2009, p.85). Relationship between Yuan Appreciation and Dollar Depreciation Currently imports from China accounted for about 10% of total U.S. imports. In June 2010, the value of Yuan was 6.79 to the dollar. In 2012 China allow the Yuan to trade in a daily range against the U.S. dollar. Soon it was announced that Yuan’s new trading band against the dollar will allow the exchange rates to move 1% above or below a daily reference exchange rates (Fung and Hong, 2012). Therefore a 25% appreciation of Yuan would be equivalent to 20% dollar depreciation. Such depreciation will result in stemming America’s appetite for foreign goods. If Yuan value appreciates, it will cause deflation, cut off foreign direct investment and cut economic growth. If these things will happen, prices will skyrocket preventing the consumers to buy the stuff in C hina, and the Chinese economies would break up to a halt. On the other hand, it will lead to the more export of U.S goods. The other country will have money and reserves to buy America’

Law case to Joan Essay Example | Topics and Well Written Essays - 1500 words

Law case to Joan - Essay Example Proximity has evolved from the straightforward test that was applied in Donoghue v Stevenson6 and seems to be applied after the duty of care has been determined. In Spring v Guardian Assurance Plc7 the House of Lords seemed to emphasise the importance of the ‘fair, just and reasonable’ factor when making a decision on the imposition of liability. In this case the judge held that that an employer who provided a reference in respect of an employee to a prospective future employer owed a duty of care to the employee in respect of the preparation of the reference and was liable in damages for economic loss suffered as a result of the negligent preparation of the reference. In Donoghue and Stevenson8 the complainant went to a cafà © with a friend who bought her a tumbler with ice cream. The shopkeeper poured a quantity of ginger beer from a bottle over the ice cream. The complainant drank from the tumbler and when her friend topped up the drink from the bottle the remains of a decomposed snail floated out of the bottle. As a result of this the complainant became ill. As there was no contractual relationship between the complainant and the shopkeeper the House of Lords were asked to consider whether the manufacturer if the ginger beer owed a duty of care to the ultimate customer. This led to the formation of the neighbour test9 the general principle of which was that ‘you must not injure your neighbour’.