How the Japanese doubled the national income

President of Russia Vladimir Putin announced the need to increase the gross domestic product (GDP) doubled. At the time, doubling adopted similar programs in other countries, for example, in Japan. But then the Japanese were talking about a doubling of national income.

The program of five steps
Japanese program «doubling national income» took place at 60-years and is one of the most famous of all the programs and plans at any time taken in Tokyo. In December 1960, the Government Khayata Ikeda (1960-1964) has set a target to achieve growth rates of 7.2% per year and doubling the national income (ND) for the years 1961/62-1970/71. However, on their own rapid economic growth was not the plan itself. The country had to achieve sustainable high economic growth, improve living standards of the population of the islands, to try to achieve full employment. The program identified five key areas to improve the Japanese economy and society. First, the planned replenishment of social capital. It is connected with the fact that housing and other social standards in Japan at that time considerably lagged behind prevailing in other developed countries. Japanese apartments, for example, because of their narrowness called «rabbit cells» (usagi goya - auth.).

Secondly, conspiring to improving industrial structure. The country faced the task of prioritizing the development of emerging industries. In the third place, declares support for trade and international economic cooperation. The significance of this provision determined by Japan's dependence on imported energy and raw materials and exports of industrial products to pay for imports. The fourth, the authorities have expressed concern about raising human capabilities and the promotion of science and technology. If Japan was able to borrow extensively abroad, new technologies, the 60-ies it zamayachila need to create something. In the fifth, it was streamlining the dual structure of Japanese economy and the strengthening of social stability. In Japan, many small businesses depend on large companies that sell products. For small businesses worse conditions of employment, labor, lower wages, etc. In the figures the program has meant that by 1970 the GDP of Japan in prices in 1958 was up 26 trillion. yen, and ND - 208 thousand yen per capita. Regular balance of payments at the end of the plan period was to reach $ 0.18 billion in the plan also enunciated the state's responsibility for promoting public sector through the implementation of long-term investment projects. At the same time expected to bring the ratio of public and private investment from 1:3 to 1:2. Growth in consumer prices is not planned, but has averaged 5.7%. In programming the methods used to estimate growth rates. In other words, the government planned growth rate of GDP, based on their political attitudes. The calculation of the remaining indicators produced by the rate of growth through structural equations, which does not, however, is an integrated model.

Real life and plans differed
The real growth rate of removing the beginning of the 60-ies of the Japanese economy accounted for 10.7%. Thus, the Government's goal of doubling the ND was made much earlier than expected. The positive balance of payments also grew faster than planned, and by early 70-ies to $ 2.36 billion And real life, and government plans were at variance as soon as the program was adopted to act.

In 1961 the economy experienced an investment boom. Investments in the private sector grew by 40%, which was much higher than government expectations. The boom has led to growth in the years 1961-1963 averaged 11%. However, they have evolved unevenly. For example, if in 1961 the GNP grew by 14.9%, in 1962 - only 5%. Moreover, from December 1961 to October 1962 industry experienced a downturn, the volume of production increased by only 0.9%. Then came growth. However, in October 1964 the economy back into a 11-month recession. During this time, industrial output fell by 0.2%, underloading production capacity has reached 23.9%. Down domestic sales decreased investment. There has been a serious increase in the number of bankruptcies of small businesses. On the stock market enjoyed depression.

The government was forced to take incentives. For example, in 1965, three times declined the discount rate was lowered taxes on corporations and the income tax. For the first time in the postwar period, Japan resorted to deficit financing. As a result, by the end of 1965, has a way out of crisis. The problem was the growth in prices. In 1965 it was 6%, while in the program laid only 2.5%. Then, the growth rate has exceeded the planned outline. In 1967/68-70/71 of the real growth rate of 13%. However, slow growth of public funds. Consumer prices rose at 6.7%, wholesale prices also showed a tendency to rise. These are summarized the results of decades of planning.

Problems faced by Government
Economists identify several challenges faced by the Japanese Government during the implementation of the program «the doubling of national income». First, the discrepancy between planned and actual growth of national economy. In part this is due to the imperfections of existing techniques at the time of such plans. However, this discrepancy appeared later in the other plans.

Secondly, during the execution of the plan revealed significant regional disparities. For example, the major differences between the level of development of the East (D) and western (less developed) coast. Increased income gap between urban and rural populations. The mass relocation of rural residents to larger cities has led to overcrowding in the major industrial centers such as Tokyo, Osaka, and raised the cost of living in cities. As a result, today, Tokyo and Osaka have «honorable» status for the most expensive cities in the world. And thirdly, a number of old industries, especially coal mining and textiles, have been virtually out of the boom. Preserved the dual economic structure, that is, continued to co-exist effectively large and ineffective small production. And fourthly, the difference in the sectoral level and pace of productivity growth led to inflation and increase in consumer prices.

In the fifth, demonstrated the apparent unevenness of economic growth for years. In the Sixth, the government actions to encourage or deter the production has not kept pace with cyclical changes in reality. In the Seventh, in some years the rapid growth of investment has led to an equally rapid increase in imports of industrial equipment and the associated deterioration of the country's balance of payments.

Plans are adjusted
In 1962, the Government was forced to start adjusting their plans. As a result, cabinet Eysaku Sato (1964-1972) adopted a comprehensive national development plan for 1964/65-68/69 years. This document is regarded as «provincial» Option Plan «doubling national income». It has been given the task of eliminating regional disparities of rapid development. It draws first econometric models were used, including a model of inter-sectoral balance Basil Leontieva.

Government measures to liberalize foreign trade and raised in this context, concerns about possible increased competition led to the creation of the next economic and social development plan for 1967/68-71/72 years. It establishes the emphasis on the development of social infrastructure and stable economic growth. Once again the government's actions have been adjusted in 1969, the new plan was aimed at the twenty years. He entered Japan in the 70's. In 1973, the world's energy crisis, and repeated increases in oil prices finally summed up the post-war phase of the development of the country's economy.

Now the question can not be
The Japanese government supported a number of strategically important industries for the country. They have priority funding through the State and the preferential taxation. Support at the state level were the key sectors of national economy and production.

In the 60 years to the industry were identified as electronic engineering, certain types of general engineering, petrochemicals, oil refining, electric power and metallurgy. However, a number of support programs was adopted in relation to depressive industries such as coal and textile industries. Experience has shown that this type of policy, including development planning, has been very successful. In Japan, a modern branch structure of economy, efficiency is not inferior to other countries. The country has become the second economic power in its power in the world. But later, in 90 years, have felt the accumulated distortions. Since then, Japan could not break out of stagnation. It seems that the country has developed rapidly until the leading industry-related product manufacturing. As soon as the Japanese have taken a great interest of financial and land speculation, the collapse occurred. Economic growth has slowed. Now the question can not be a doubling of national income in ten years. This may be, and is only a restructuring of the Japanese economy, maintaining exports at best - to moderate growth.

In this sense, to the President of Russia Vladimir Putin, declared the need to increase the gross domestic product (GDP) doubled, is «nepahanoe field». Many industrial structures in Russia have been eliminated, many have not yet been established. Stock and financial markets are at an early stage of development. Land in Russia a lot, and price speculation with it on such a scale, as occurred in Japan, to introduce today is practically impossible.

Alexei Sokolov

Frank, born of suffering

In autumn 1356 the French King John II to the 20 thousandth army overtook five thousandth the British squad, who were returning with a rich prey, after raids in Loire. The French burned the thirst for revenge. They were spit that their opponents have put around his corral, and dig around, ready for battle ...

How much is a king?
King John tried to stop their subordinates. Explained that the English camp, in fact - the same castle. He offered to wait until at least morning and evening was not far off. All in vain - knights in battle. Alas, the British gave them to understand that the art of war - it is «not a sword to wave». Sixteen times brilliant French cavalry went over the top. But opponents of the noble met boom, maim and kill horses. French losses were appalling - more than 1500 knights, the color of the nation. Very brave and very stupid. But most importantly - in captivity into the French king himself. By the end of the right ideals of chivalry, John did not retreat along with the other. King destroy opponents a huge ax, and beside him stood his 14-year-old son Philip and shouted: «Father, the attention of the left, right, rear!»
Englishmen rejoiced. Now they can dictate their will to the French. And for the beginning of the King offered to redeem himself for the 4 million gold. Dauphin Charles, who quit sensibly with the remnants of the army, as the obedient son tried to save his father from captivity. He put together the States General, and demanded from them one thing - money. But MPs are not going to shell out. They recalled King John and his AWKWARD lesion, and the imposition of new taxes, and the damage to money, having to walk in that time. Coins «big white» form already contain barely half the silver from what was in the beginning of King. States General demanded the resignation of the old royal advisers and the elimination of tax privileges of the nobility. They proposed to tax even the clergy. Dauphin Charles particular choice is not necessary. In the end, was hit on his hands. MPs have promised money, but instead assigned by the States of the functions of the supreme legislative and judicial and executive authority in the country.

JOHN II (Jean II, Jean le Bon) (1319-1364), called the good, the king of France. John, son of King Philip VI (the first dynasty of Valois), and his first wife Joan of Burgundy, was born in the castle-Gedeh Lightning (near Le Mans) April 16, 1319 ascended the throne in 1350 after the death of his father. John did not have the talent statesman, he was appointed to senior government posts dishonest people and spoils the coin in order to obtain funds for the war with England. John died in London on April 8, 1364 dividing ownership among the four sons, John left his successors to the throne of the heavy legacy, particularly Philip the Brave, who inherited Burgundy.

But when ordinary citizens know how much they will pay, they took up arms. Carl fled from Paris. He tried to stifle the rebel starvation, blocking the the introduction of products in the capital. All this is up the cup of patience neighboring farmers. Started what later became known in history «jacquerie».

With a sword and a horse
Only at the cost of incredible effort and rivers of blood spilled in the country managed to bring relative order. Even the British penetrated the French kingdom and the suffering sbavili amount of ransom for the King to three million. Through the intervention of the Vatican signed the peace.

King John was released from captivity on parole, that person was able to squeeze out of the scorched towns and 12 villages and a half tons of gold. John famously roll up our sleeves. But the dauphin Charles, and all survivors advisers together in his tsyknuli. Indeed, some rebel farmers perebito was more than 20 thousand, and the execution stopped only because of the fear that there will be harvest.

Then John decided to hold a monetary reform. Since reducing the proportion of silver in the forms were already beyond nowhere, it is aimed at the gold coins.

Royal Ordinance all subjects were asked to pass on remelting old coins, including foreign ones. In return, started chasing the new to 3.8 grams of weight - with the image of the king of horse with a sword. Legend of the coin reads: «Iohannes dei gracia francorv rex». Rex francorv - King of France. Hence the name of the new coins - «equestrian franc», or franc. It was worth 20 Tours salts. Loyal subjects, however, does not hurry to carry the royal coffers of all its ECU liondory, shesdory and angeloty. John Preeti and prizadumalsya.

At that time, escaped from Calais, Prince Louis, the remainder in the hands of the English as a hostage. King John nobly went into exile instead. I whether he will remain faithful to the traditions of knight, or an honorary captivity seemed devastated homeland after a quiet haven - the truth, we do not know. Redemption for his father Charles V was never paid. John died in London on April 8, 1364, leaving his successors difficult legacy.

Above all, France, thanks to his rule, Knight lost about a third of its territory. And acquired a monetary unit - franc.

Alexei Sinelnikov

Euro - NEW single European currency

The main event in 1999 in the European Union will introduce a new currency - the euro. Technical preparations for the introduction of the euro will be specially created in 1998, the European Central Bank.
The Treaty on European Union signed on 7 February 1992 in Maastricht, who has started a new phase of development of European integration. From the moment the treaty enters into force (1 November 1993) The European Community became the European Union. This means a significant change in relations between EU member states, the essence of which is to move from the coordination of national governments to develop a common policy. It is anticipated that the emergence of European Union countries with a single internal and foreign policies, will raise the bloc of Western European countries on an equal footing with the United States.
As a result of implementing the new strategy of cooperation was established the Economic and Monetary Union (EMU). Its formation can be divided into three phases.

Phase I (July 1990 - December 1992). The main events of this period were: liberalization of capital movements within the European Union, the completion of the formation of a unified internal market, development of measures for the convergence of several makroekonomicheckih indicators of Union member countries.

At stage II (January 1994 - December 1998) was established by the European Monetary Institute (EMI), produced a legal framework and procedures for future European System of Central Banks (ESCB), led by the European Central Bank (ECB) member countries Union embarked on the preparation of a single currency - the euro, increased coordination of economic policies of member countries Union.

If we talk about the main events of Phase III, it can be identified as follows:
- The launch of the European Central Bank;
- Implementation by the parties to the EMU single monetary policy;
- Introduction of a single European currency, first in non-cash, then cash in circulation.
At the present time is much work to establish principles and mechanisms of interaction that underlie the future of monetary union. The transition to a unified monetary policy and the replacement of national currency to the single European currency had economic, social and political objectives. The logical continuation of the EMU will transform the EU into a single economic space, within the boundaries of which the participating countries will have equal conditions for all activities.
Without a stable common currency of European Union countries are unlikely to pursue a common economic policy, which is a prerequisite for the transition to a new level of political integration. Currently, the volatility of rates of Western European currencies has meant that European central banks are forced to spend part of their foreign exchange reserves or funds of mutual funds. In addition, when foreign exchange transactions, banks are forced to insure against currency losses and as a result increase their rates and interest rates. In the case of replacing the national currency to the euro in the need to disappear, that would lead to some reduction in cost of products in the real sector of the economy. Stable and low interest rates - not just a way to quell inflation, but also the essential condition for economic recovery of the country.
Over 90 years due to fluctuations between the national currencies of EU countries annually nedoschityvali 0.5% of GDP, and lost thousands of jobs. This situation can not help solve the problem of unemployment, which in the whole EU to 11%, while in Japan and the USA - 5,5% and 3,5% respectively.
Setting rates of national currencies to the euro would allow investors to currency risks are not taken into account when assessing the effectiveness of projects. This will lead to an increase in the number of profitable projects and thus reduce unemployment. In Germany, for example, it can be reduced from 9% to 8%, which is equivalent to the emergence of 400 thousand new jobs.
Given that the German mark - the most stable currency among the European currencies, it is logical to assume that in countries with less stable currencies the effect of the introduction of the euro will be even more significant. From the success of the European Union will be able to provide the necessary economic growth, will largely determine the integration of European states.
The anticipated economic recovery EU leaders will enhance the competitiveness of European products on the world market. Solving this problem will enable the countries of Western Europe to consolidate its position in the international market and the division of labor to build its relations with the U.S., Japan and South-East Asian countries to a qualitatively different manner. The advent of the euro would greatly save on the cost of national currencies, as well as the existence of different currencies annual cost of European countries in the 20-25 billion ECU (26-33 billion dollars), including costs related to accounting transactions with currencies of EU countries , insurance, foreign exchange risks, exchange, preparation of price lists in different currencies, etc.

1998

Interventions: Pros and Cons

Just one month ago, the level of 103 for USD / JPY seemed inevitably provoke the Bank of Japan intervention.

Once the levels of 106, 105, 104 and now 103 have fallen like a chain of dominoes, many traders wonder whether intervene Ministry of Finance of Japan at all. Since the last intervention, the Ministry of Finance in March 2004, the political and economic situation has changed. In this article we will attempt a closer look at some of the new challenges facing Japan, which makes intervention more problematic policy for the country than in the past. While few analysts believe that the Ministry of Finance of Japan has refused to intervene at all, many traders believe that Japan may be better to wait for a global consensus before returning to the foreign exchange markets to support the dollar. We will explore some factors that could cause such a movement and try to weigh the pros and cons of intervention?

The reasons against intervention

1. Movement of Asian Trade Since 1990. on the current share of China and other Asian countries in Japan's exports rose from 1 / 3 (31.1%) to almost 1 / 2 (48.6%). Exports to China and Hong Kong increased from 6.7% to almost 20% (19.3%) of the total Japanese exports. A deeper look at the figures showed that Japan's exports to China alone is on the verge of an exceptional share of the U.S. market. The value of this large-scale changes in the direction of greater intra-Asian trade is enormous. One key difference between trade with Asia and trade with the U.S. and Europe is the fact that the majority of traders in Asia made in yen rather than dollars. This dynamic creates a natural advantage for Japanese exporters who do not have to worry about competitive pressures because of the currency in the so-called ienovoy zone. As Asia continues to become progressively increasing part of the Japanese export market, and thus contribute more to the Japanese corporate profits, the need for regulatory intervention in the USD / JPY will decline. Given that the U.S. economy has faced, it seems insurmountable for the foreseeable future, the deficit of current account and federal budget, Japan is probably made the strategic decision that the future path of economic growth is in Asia. Because the value of the U.S. market declines in importance for Japan, the need for aggressive intervention the Bank of Japan significantly reduced.

2. Natural resources have become cheaper. Since the 1980's, Japan has been very diligently at reducing the oil as the main component of its energy needs. Japan's dependence on oil was 77% before the first oil crisis in 1973, but now is less than 50%. This decline reflects the progress of industrial sector in the use of alternative energy resources like nuclear energy.
However, Japan must still import 99.8% of its oil and is very vulnerable to higher energy costs, which are very large impact on its industrial sector. Because oil is traded in dollars, much stronger yen reduces the negative impact on the Japanese economy, higher prices for natural resources like oil or steel. For example, in terms of yen, the import prices of crude oil were 50.5% lower than in September 2004 than at their peak in the 1980's, when the barrel of oil cost $ 35.80. A strong yen has demonstrated its value to the economy, even when we compare the current price since the mid 1980's - a period during which oil prices were relatively low. In contrast to the middle price of the 1980th at $ 23.80 per barrel, current price in yen, indeed, 17.7% lower. Since the market began to understand that due to limitations of supply and increasing demand from China,
oil prices could remain above $ 40 a barrel even for a long time, the pressure on Japan's decision not to intervene in the foreign exchange market can be enhanced. Indeed, looking at recent data on the Japanese Index of import prices, we see that, although oil prices remained at a record peak in October, the Japanese oil costs, actually fell to -2.6%, helping to reduce the overall index to -0.8%; as the yen went up against the dollar.

3. Political pressure. "I would just like to say that this is a real problem, of course, if you have some international traffic in exchange relations, and you have only one part of the world (Europe), which actually pay the bills for it," so rightly said Klaus Libsher, a member of the Governing Council of the ECB. With the euro risen from 1.24 to 1.30 in a few weeks, many European politicians are becoming concerned that the euro single currency bears the main load rearrangement. Most global experts agreed that the dollar should decline against major currencies to ease the U.S. current account deficit. However, if the dollar decline is much stronger against the euro than against the yen, while European exports will be disproportionately punished in the global market. In addition, because the U.S. is trying to exert pressure on China to increase the rate of the yuan, the Japanese officials would be hard to press to start the intervention, which can also substitute them under international criticism.

Reasons for intervention

1. Possible repetition of a recession. In March 2004, Japanese GDP growth rate of 6.4% for the quarter. By September of this year, gross domestic product growth slowed to a virtual level, showing lightly increase of 0.3%. Clearly, 70% of the first burst of energy costs, which led to a global slowdown in demand, was the root cause of the rapid reduction of GDP growth. However, during the same time, yen increased by 7% against the dollar - rate USD / JPY fell from levels of 112 at the end of March to 103 now. As exports are the foundation of its economy, Japan is seriously suffering from the relentless appreciation of its currency. Until now, Japanese manufacturers, which have some of the highest rates of productivity in the world can absorb the increase of the yen from its profits. However, as the USD / JPY was in 105 boxes, Japanese exporters are caught between rising costs of natural resources like oil and steel and the inability to raise prices because of competition from the dollar zone. "Toyota Motor Corp." and "Nissan Motor Co." this month accused the rise in the yen unexpected decline in profit in the third quarter. President of "Toyota Motor Corp." Fuji Cho said that the strengthening of the yen "unpleasant." As the situation continues, the Japanese industrial sector will begin to suffer (many analysts argue that already), which will lead to another recession in the Japanese economy. 3 Having experienced the strongest decline in the 1990's, the Japanese authorities are very sensitive to any factors that may push the country back into a state of economic malaise. Recently, Japanese officials made a series of verbal interventions against the further strengthening of the yen. The head of the Bank of Japan Toshihiko Fakui said, "We are closely following the movements of exchange rates ... all exchange rates." Fakui warned that he is willing to act as soon as the order is received from the Ministry of Finance. He noted that recent movements have been caused by speculation of short-term players. In the past, whenever the Bank of Japan referred to the "speculators" as the root cause for the movements in the FOREX market, this led to "punish" those traders through intervention. The central bank can just wait for when the market reaches extreme levels, such as the levels of February this year that will allow it to achieve maximum effect, since its intervention will lead to greater momentum at the expense of operation
stop-orders, enhancing the movement upwards.

2. Reduced rates of the Bank of Korea. 12 November, given that inflation is under control due to the rapid growth rate of Korean Won, Korea's central bank cut a key interest rate by a quarter point to 3.25% to stimulate higher economic growth. The decision caught the market unawares. In explaining this decision, head of the Bank of Korea Park Syang said, "domestic economy as a whole is in a downward trajectory, as consumption, investment and construction remained sluggish, with a slowdown in exports." Although the Korean economy is actually growing at 5%, Mr Park said that "conditions (this month) is almost the same as in the past month, but a lower U.S. dollar against the local currency has become a negative factor for economic growth, although it has positive effect on price stability. " Since Korea is a significant competitor to Japan both in Asia and the global export market, the actions of monetary authorities of Korea are a big challenge for the Japanese economy and provide additional pressure for intervention in the near future. In recent years, Korea's export brands, such as "Samsung" and "Hyundai" and started to beat the Japanese products, not only because of the price difference, but also on the basis of quality. Isho -
dya of the dynamics of this, Japan will be unable to compete against Korean products due to advantages in quality. The devaluation of the Korean won may allow the goods to capture greater market share, if the Bank of Korea will lamblike by the Bank of Japan. If Japanese manufacturers begin to lose their Korean competitors due to exchange rates, the pressure on the Bank of Japan to begin the intervention will grow exponentially.

3. Historical levels of intervention. As shown in the table, over the past year (and even the past 3 years), the Ministry of Finance of Japan conducted the intervention at levels much higher than the current. They have hitherto prevented the rate of USDJPY down nastol low as 103.40 in March, without intervention. However, it was immediately before the start of the new fiscal year. With growth already recovering, and considering that most exporters are not likely zahedzhirovalis accordingly at current levels, we expect that the Ministry of Finance will become more and more closely at current levels.

History of the Bank of Japan intervention

Forex Magazine
based on www.fxstreet.com

History of the Russian currency market

... On behalf of direct participants of the events

Igor G. Doronin. He graduated from the Monetary MGIMO office in 1965, worked at the Market Institute of the Ministry of Foreign Trade. He was engaged in monetary and financial problems of foreign countries and the USSR. Since 1984 he has worked in IMEMO, participated in the formulation of monetary management mechanism foreign economic relations. From 1993 to 2002 he worked at MICEX as an adviser. From 2002 to present Senior researcher IMEMO RAS.

What began with the currency market in Russia?

The beginning of change in the management of monetary and financial relations goes back to the beginning of the process of restructuring in the mid 80-ies. Then talk about the market was not. The challenge was to improve the calculations of foreign trade, enterprises interested in exporting their products to combat the "scourge of the import, move away from commodity-oriented export. And the improvement to be implemented within the planned operating system and command control systems.

The situation in foreign trade at the time it became alarmingly disturbing. Imports grew rapidly themes outpacing exports. Shops are increasingly purchased on credit. Growing public debt. Western firms have become the cup to deny credit. There was a feeling that the country is close to financial bankruptcy. You had to do something.

Initially, to encourage exports and curb imports of foreign exchange rates have been coined. Then currency allocations. But all these changes have not infringed on the principle of targets in foreign trade, which was the main factor in the imbalance in trade. They spoke only 5 - 10% of the foreign trade turnover of the USSR.

The prototype for the future of the foreign exchange market became Vneshekonom bank auctions the USSR, and the subject of trade were the relatively paltry sum of foreign currency payments, which companies can keep in their possession. This trade did not do the weather. Lion's portion of the currency has continued to transfer the state under the plan.

Is it not clear then, that for the foreign exchange market should have been to allow businesses to sell foreign exchange earnings in the market, as importers buy it on the course, which emerge on the market?

Of course, it is clear. Moreover, already in 1990 the idea of monetary exchange. But by then the moment was lost. Almost all currency received from exports was to pay off the debt the state. Trading was nothing.

And, as was found out of the situation?

In December 1991 the USSR ceased to exist. At the same time, it meant bankruptcy and its external obligations. Russia, as is known, became the legal successor of the external debt of the USSR. Under the obligation to repay the debts of the Soviet Union Russia and the West agreed to the foreign exchange market to delay repayment of external obligations of Russia. So the opportunity to trade currency.

Start of work on the formation of the Russian currency market put the Decree of the President of November 15, 1991 on the liberalization of foreign trade activities in the territory of the RSFSR. " It contains revolutionary for its time position. In particular, banks authorized to conduct foreign exchange transactions, were allowed to open foreign currency accounts to all legal and natural persons. Exchange rate to foreign currencies to emerge on the basis of supply and demand at auctions, exchanges, the interbank market, with buying and selling of currency by commercial banks and other legal entities and citizens. With this decree the Russian ruble began to possess qualities of internal convertibility, which was a prerequisite for the emergence of the domestic currency market.

Why the emergence of the foreign exchange market in Russia is linked with the Moscow Interbank Currency Exchange?

At first, the element of the foreign exchange market was a major threat. Then a lot of brokerage companies operating in various commodity exchanges are ready to serve foreign exchange operations of enterprises and organizations. If you recall, almost every shop and stall currency bought and sold, along with soda water.

The overriding need of the time was to streamline and organize the trade exchange. The creation of the Moscow Interbank Currency Exchange in January 1992 and has been organizing such a beginning. Market from the very beginning acted as an organizer of trade exchange between banks.

As a result of stock trades to determine a single official exchange rate of ruble to the dollar, on which banks are calculated in business and on which the fixed exchange rates. Clear rules for bidding on the stock exchange to ensure the transparency of the process of forming the ruble, which was needed as the Central Bank of Russia, and the banks who participated in the auction.

At that time, stock trading, without exaggeration, was a symbol of the transition to a market economy. They go ... Yes, yes, as in the theater! Tenders must be clearly be carried out not only technologically, but also a true movement of hands, brace up the phrase into the microphone, prompt a smile. It was art, which at that time owned the exchange broker Alexei Mamontov, now president of the Moscow Interbank Currency Association.

Press and television require accreditation to bid. It was in that look and what to write. All compared with western counterparts. We pride ourselves on: now we are. Traders - representatives of commercial banks were going to trade hall. In the MICEX trading system prior to bidding "upload" currency for the sale and purchase of currency for rubles. So by the beginning of the trading was well known, as proposed currency for sale and how much currency you want to buy. Typically, the demand always exceeds supply. Bring into balance the demand and supply could be due to the strengthening of the dollar. With the gradual growth of dollar traders, in consultation with the leadership of the bank (kept us on the phone) to add a currency for sale, and bids and shot. Once achieved equilibrium exchange broker said - "fixing, gentlemen." Exchange equilibrium becomes official dollar before the next auction. How significant was the difference between supply and demand, the higher the dollar rose, the longest lasted for bidding, the more arts and skills required of course a broker.

Introduced the principle of mandatory sales of export currency earnings of at Interbank Currency Exchange allowed the Central Bank of Russia to control the sale of currency by banks and ensure liquidity in the foreign exchange market.

Participation of the Central Bank in the Interbank market as a buyer and a seller allowed to smooth fluctuations in currency exchange rate to foreign currencies.

What do you think the changes have occurred in the exchange currency market since its inception?

The current market is not similar to that which existed in the early years of its establishment. First, a market characterized by high volatility. Course rublyastremitelno decline. The main reason was persistent fiscal deficits, which require significant emissions. As a result, demand for the currency is constantly exceeding supply. The Central Bank due to extremely low levels of foreign reserves had not been able to have an appreciable effect on the dynamics of the course. Memorable event in the exchange currency market have become so-called "black Tuesday" in October 1994 and August 1998, accompanied by a significant fall of the ruble to the dollar.

The situation in the market opposite to that which existed at the time - offer the currency in the market exceeds demand. Reduce inflation. Confidence in the ruble grew. New tools for embedding free ruble funds. Became more profitable to invest ruble funds in shares and bonds of companies, to keep funds in rubles in bank deposits. Increase confidence in banks.

Secondly, the current foreign exchange market more liberal. The requirement established by the compulsory sale of export proceeds in foreign currency exchange. Now it can be sold in the interbank market. Moreover, the lowered standard of compulsory sale. If earlier it was 50%, now - 30%, and in the future are invited to abandon the compulsory sale.

The third change is exchange. In fact the modern market - a powerful server, software, communication links that connect remote locations to the trading server and the people who serve this technical complex. Passed away last bazaar, where traders are banks. It replaced the server, and traders - remote workstations located in the offices of the banks-participants of the foreign exchange market. Technology has changed auctions. Instead of fixing bid being in the double auction. Exhibited cross-application for the purchase and sale and in the case of convergence rates and volumes on the purchase and sale, the transaction is automatically. Based on the weighted average rate chopping-up of transactions was determined by the official rate.

Changes in the market place not by themselves. They are the result of policy formulation in which the active participation of the former General Director of MICEX AV Zakharov and Exchange Board Chairman A. Potemkin.

How important the role of stock exchange market at the present time?

I think the stock exchange trading will retain its value for a long time. They will remain an important, unique feature of the Russian currency market. With the latest technologies we have a national stock exchange market. The MICEX trading system combines regional currency exchanges in St. Petersburg, Novosibirsk, Rostov-on-Don, Vladivostok, Ekaterinburg, Nizhny Novgorod, Samara in a single trading system. Stock trades are carried out simultaneously, in real time in all markets simultaneously. This is something that is not available to any Russian commercial banks. Applying the latest technology has enabled a significant speed up the calculations, minimize risk and reduce fees for ongoing operations, which expand the bidders.

Finally, the Russian interbank market perform not only trade currency, and trading floors have become universal. They are traded government securities, equities and corporate bonds. This trade is conducted simultaneously in all exchanges within a single trading session.

What are the prospects for the Russian currency market?

The market involves competition. On the currency market, competing currencies, financial institutions, trade and payment systems. Liberalization and technological progress will exacerbate competition.

However, the position of any currency in the market are determined by monetary authorities pursued fiscal and monetary policies. From it depended the credibility of the stability of the currency and its rate relative to other currencies. Competition leads to weaker currencies in the market pushed more powerful not only in international payments, but also nationally. Accordingly, changing the structure of foreign exchange turnover in the market, changing the ratio of rates quoted currencies.

Another factor in the development of the foreign exchange market is the integration of various segments of financial markets. Operations of currency exchange market is increasingly linked to the overflows of capital between countries, investments in various financial instruments. Investment companies, pension funds, insurance companies form a diversified portfolio of securities, change their structure depending on the risk, profitability, prospects for the movement of currencies, which are expressed in these instruments. The attractiveness of investment in financial instruments depends on the level of development of the domestic financial market, the quality of the market, the protection of investors' rights, as well as the stability of the currency.

Given the prevailing global trends we can say that the future of Russian foreign exchange market will depend on how reasonable and balanced would be fiscal and monetary policy of the Russian authorities how it will ensure the credibility of the Russian ruble, both domestically and abroad. Finally, it is important to the position of the ruble to the dynamics of the Russian financial market, the growth of confidence in financial institutions market, broadening the range of traded financial instruments protecting the rights of investors in the financial market.

Alien Money

Ashraf Laidi. Are Euro for the next rocket?

The combination is expected raise rates from the Federal Reserve and the weaker-than-expected report on the payroll for the month of June in the U.S., the Euro has given vital impetus to improve. Breaking the 18-week trend line resistance above $ 1.22, EUR is positioned to further strengthen to the $ 1.2480-00 area in mid-summer. The June FOMC meeting behind us and the next FOMC meeting in a month. Euro receive its share of optimism and panic as the output of American and European data, as well as statements by Fed officials, for svyaschayuschih markets in the past thought "policy-meykerov" for the future of their policies.

Although there is a strong chance to see $ 1.25, we expect that the euro will face at least one obstacle in the month, which will send it back to $ 1.2370 by the end of the month. This obstacle could be the result of strong consumer price index in the U.S. this month, or any other event which could give the credibility of a possible raise rates by 50 basis points at the August meeting, FOMC.

Indeed, FOMC made it clear at its meeting in June that it intends to follow a balanced policy with regard to the tightening of rates, ie with a minimum increase of 25 points. But the Committee, at the same time, keeping the door open for more aggressive steps in its policies when it stated that it would "respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." Probability of "yastrebinyh" statements by the representatives of the Federal Reserve remains significant, especially if the yield on Treasury bonds continue to decline, and will require incentives that might be too generous to the Central Bank. Although the 10-year Treasury securities reached 10-week minimum, we have seen many times this year, a strong record as one way to increase profitability, at least 20 points in 2 days. A decline in the Euro remains equally possible.

On the European front, rising inflation and improved figures for the business - the climate attracted further attention of traders, given the possibility of tighter monetary policy in September. After inflation jumped to 2.5% in May from 2.0% in April, the estimates for June converge at 2.4%, suggesting that the trend of price increases may last longer than expected. In the June decision by the policies of the European Central Bank hinted that price pressures may not only occur in the medium term, but could also continue in the longer term, being much above the level of 2.0% as oil prices remain high and the strength of global economic dynamism can continue to put pressure on prices of goods, including the price of oil.

Although data on the consumption and retail sales remain fragmentary, reviews the business climate showed gradual improvement, supported by Managers Index on purchasing, manufacturing and service sector, which expanded to 10 and 12, respectively. In addition, an overview of the German ZEW rose in June, violating the 5-month-lane drop. As soon as the Federal Reserve will make its second rate increase in August, would be unlikely that the ECB would allow the Federal Reserve to make the third increase in September without taking any action, as well as the continuation of price pressure in the U.S. definitely transferred the euro - far beyond the comfort level of inflation at 2.00 %.

Broke above 18-week trend line, euro accumulated technical capacity to move to follow the objectives, namely, the $ 1.2450-00, which limited the level of recovery in 61.8% of the movement of $ 1.2926-1.1759. But we feel that the inevitable setback caused by the fundamental data to prevent net increase for this purpose and will consolidate in the area of $ 1.24-25.

Ashraf Laidi
www.forexnews.com

Sterling fell after the decision on interest rates

Pound fell after the Bank of England a second consecutive month, decided to leave interest rates unchanged at 4%.

Despite the decision, expectations of an increase in May, not diminished, given the growth in consumer demand in Britain, particularly in the housing market.

"After an immediate drop after the announcement of the decision of the Bank, Sterling seems to have returned to equilibrium," said Chief Economist, "ECU Group" Neil McKinnon.
Following the announcement of the decision, sterling fell to 1.8324 marks per dollar from 1.8376 before this level.

Analysts believe that the Bank of England may want to postpone the increase in rates until its next forecast for inflation and growth in May.

"Sterling is not sold in large volumes because people look forward to an increase in rates next month," said currency strategist "ABN Amro" Aziz MakMahon.

Bank of England raise rates in November and February, each time by a quarter point. McKinnon of "ECU Group" has warned that the Bank of England may have missed an opportunity today to send a signal to borrowers that continue to take advantage of historically low interest rates.

"I guess if this continues, the Bank of England will probably have to act more aggressively," he said.

On the other hand, the euro was under pressure after continuing bad economic news from Germany is the largest economies in the Euro-zone.

German industrial production in February, taking into account seasonality, fell by 0,7% against the expected growth at 0.3%. The single currency also remained under pressure because of the troubles arising from the head Bundesbank Ernst Vilteke.

Vilteke came under pressure to resign after it became known that he had allowed "Dresdner Bank AG" to pay for a four-day stay at a luxurious Berlin hotel for himself, his wife, their three-year son and his 25-year-old eldest son with his girlfriend .

"The technical factors include the closing of positions before the long Easter weekend, which also helps the dollar regain some of its recent losses," said chief currency strategist "HSBC USA" Mark Chandler.

based on Fxstreet.com

U.S. Federal Reserve. Expert opinion

The Federal Reserve is unlikely to be quick to raise rates

John M. Berry - Analyst, "Bloomberg News" gives its opinion.

Federal Reserve Chairman Alan Greenspan made it clear in his speech on Wednesday in the U.S. Congress that when the Fed makes its first move to increase interest rates, it is not likely to be the beginning of rapid growth rates.

Greenspan explained that the Central Bank kept its interest rate at 1% for so long, not because nothing has changed, but because the representatives of the Federal Reserve thinks "the strategic level."

While Greenspan did not announced all of this, the strategy of the Federal Reserve was to keep rates unusually low to prevent deflation, and at the same time, Left Behind stimulate economic growth.

"The basic difference between what was and what is happening now is an extraordinary productivity acceleration," said Head of the Federal Reserve one of the members of Congress to question why the Fed has not taken already raising rates.

"Price pressure is far from what it should be under normal circumstances," said Greenspan. "Normal is the restoration, in which staff costs are rising, not falling, while inflation was already higher than the Fed would like."

And price pressures are not going to go back to "normal", while productivity growth has not significantly slowed and the pace of wage increases has not accelerate. Greenspan predicts that this process will soon begin, and that some growth is already reflected in earnings, because the share of national income transferred starts working in higher wages.

Labor costs
How fast and how high the Fed will eventually want to raise rates will depend mainly on the fact whether there is already, and to what extent the turnaround trend in labor costs.

At some points, it was Greenspan's speech, it was not clear whether he had described what happened in the past or what might happen in the future. However, there is no reason to think that the Fed will change its approach to the question of interest rates based on a careful balance between the benefits and risks.

As Greenspan put it, "when considering the specific potential inflationary problems must take into account all the elements involved in this situation. And remember that any monetary policy that you Take, carries risks. And you have to balance between risks and benefits."

Future improve
Another question, which asked Greenspan - long as the Fed continues to raise rates usually, after beginning to do so.

"Once we begin to raise rates, we have continued it is usually over a long period," said Greenspan. "Even though such periods usually lasted a year or so, we should not think that this will necessarily occur in the future. There is no temporary association with the test program carried out by the Federal Reserve."

In other words, people are deploying market warrants based on future steps the Federal Reserve must be careful. Remember the standard warning to investors: Past action is not a guide to future actions.

What we do know from the remarks made by Greenspan and his colleagues, it is only that if the economy will continue its recovery as expected, the Federal Reserve at some point raise its 1% of th bet.

None of the Federal Open Market Committee (FOMC) has no doubt that the current rates will cease to conform to the conditions as soon as it becomes clear that the economy will grow enough to provide new jobs needed to reduce U.S. unemployment.

The good news for Greenspan and the FOMC is that with such low inflation, they can remain "patient" even after decide to raise your bid. The Committee is unlikely to be to try to agree on a specific series of growth rates, when they decide to make first increment.

Bloomberg.com

Bank Of Japan Rise Yen

David DuRosa David DeRosa, president of "DeRosa Research & Trading", professor of finance at the Yale School of Management and author of "In Defense of Free Capital Markets."

April 1 (Bloomberg) - Bank of Japan gave us a lesson about what can cause damage to the central bank in an attempt to control the currency market.

The dollar traded close to 106 yen at the opening of Tokyo on March 31. By the end of the Asian session, the dollar was at 2 yen below. It was as if the U.S. failed in the air hole and fell like a stone.

It is important that March 31 was a day when most Japanese companies close their balance sheets for fiscal year 2003. Since many of these companies depend on the dollar, the exchange rate of March 31 was a material factor in determining the profit or loss for the year.

As a starting point, the company will use the course at 105.69 yen / $, which has been reported "Bank of TokyoMitsubishi" at 9:55 am.

Please note that if the dollar / yen, strong yen upward movement began about 10:46 am Tokyo time. The companies had full-time to fix on the yen, before it began to rise against the dollar.

Ask what profits would have been Japanese companies, if closed at the rate of exchange at the end of the day, after growth of the yen.

Where was the Bank of Japan?
The idea that Japan is interested in a weak yen to help its companies look profitable - an old theme in the currency market. What happened on 31 March, adds a milestone to the story, whether it is or not.

Growth Yen March 31, raises questions of monetary policy the Bank of Japan. None of the participants in the foreign exchange market are not reported on the Bank's activity in the market to arrest the yen climbing.

There are two ways to interpret the apparent lack of interest from the Bank of Japan. More than beautiful, it is assumed that the Bank of Japan has remained outside the market, because they do not want to manipulate the exchange rate on the day when companies close their balance sheets.

Less than a good interpretation is that after a morning of record on yen, the Bank of Japan was lost every interest in the yen. The mission was completed, the Bank of Japan's "closed the umbrella and provided the foreign exchange market at the mercy of its participants.

The dollar went down and the yen has gone up.

The biggest opponent of excessive mobility

Yet this contrasts with a recent history of the Bank of Japan. Japan only in March, has sold 4.7 trillion. yen ($ 45.2 billion). This amount, which is breathtaking, was actually less than the average for the preceding two months. For the entire fiscal year, which ended March 31, Japan sold 32.9 trillion. yen ($ 316 billion), to counteract the bottom-up momentum of its currency.
Oddly, Japan is the biggest enemy of excessive movement in the currency market - and here is a case where mobility is linked directly with the Bank of Japan.

Probably would never have been such changes, and at such a speed, if Japan had not spent so much time and money supporting other currencies against the yen.

March 31, when it became evident the absence of the Bank of Japan, the yen flew. And that Finance Minister Sadakazu Tanigaki can say about this?

"Not a small movement
Tanigaki said, speaking at a press conference yesterday that the movement was "not small". Then he repeated earlier statements that Japan was ready to take action against currency speculators.

On the other hand, Tanigaki said he wants to allow market mechanisms to determine the exchange rates as they reflect fundamentals. "

Tanigaki also said that their sales of the yen helped to combat deflation, and that for Japan, it is important to continue this program.

Now that the case, when the market reflects the fundamentals, because all else is deflation? What is he going to do then?

As Tanigaki loves "fundamentals", this is something fundamental to it: the movement of the yen on 31 March resulted in severe confusion in the marketplace about what Japan wants to do with the yen.

Speculations and not speculation, the best thing that could make Tanigaki - is clarified to confirm the assumptions market.

Forex Magazine
based on bloomberg.com

The History Of Money

What money do not. Known for saying that, even from the air, in fact, not too far from the truth. At different times in different people as the money used pieces of ivory, quartz, or zhadeita, cowrie shells, drums, bird eggs, metal tableware, leather, mats, nails, tips for arrows, bulls, pigs, rice, salt, bracelets and necklaces , Coils of yarn, decorated axes - and the list is not yet full.

Historians believe that money will appear at some stage of development of society - is inevitable and the same unique process at the same time as the formation of a national language. A primitive peoples on the basis of trade was barter, you are to me - I have you, but with time in this chain suddenly cut money. Why? One of the possible and frequent responses: for convenience, required some equivalent, through which grain could be equated to the reindeer skins.

Such a theory we are all familiar, but unfortunately, it does not explain why the equivalents chosen so different, and why did one time suddenly became uncomfortable without them do. These gaps filled with other scientists who hold the view that the first money, too, is a form of barter.

In each tribe, were subjects for one reason or another, the most valuable and therefore everyone. It is on them, each would have gladly traded anything, it is them as gifts teaching priests and chiefs, and sometimes even left at the altar for the gods. The notion of the value of such items was different - in one attractive convenient storage and transportation, while others - the strength and durability, in the third - a rarity in the fourth - attributed magical properties, or simply beautiful. Over time, they and the money was destined to become.

Traces of this transformation are preserved in some places almost to the present day. Thus, until 1949, the peoples of West Africa as money used manilly - ornamental metal jewelry. Signs of wealth and riches, in the literal sense of the words were there - happy manill wore them around their necks and hands. Similarly, there were necklaces of shells with Indian tribes in North America. The value and volume, and in another case, provided the picture - natural or specially caused.

The islands of Fiji necklace made from whale teeth, and called them "tambua. Even the sound of the word reminds us to some "taboo" that far from the truth: whale teeth were used for religious activities, and access to them had only chosen. Not as compact and easy to use was the stone discs with round holes, the money served the residents of coral islands until 1960, but they were also chosen because of their supposedly sacred nature.

Some people prefer to pay in agricultural products. Even first-world banks that have appeared in the II millennium BC in Mesopotamia, in reality, were normal granary. All calculations were performed exactly grains - real or a check payable to bearer. The system seemed very easy, was formalized in the Code of Hammurabi, and over time, even spread in Egypt. While in Egypt at that time already knew how to mint coins.

Interestingly, similarly, not only grain, and tobacco settle in Virginia back in the XVII century. And on the certificates reflect the number and quality of tobacco leaves instead of the real in the future, the U.S. state of crossed nothing less in 1727

Another frequent form of primitive money, strangely enough, acted livestock. While that is strange? First, animals have specific practical value, and secondly, was used for sacrifices, and therefore has a religious value. Finally, unlike corn or tobacco, it is easy to calculate it in pieces - that he preceded the appearance of the coins.
In many languages, for example, in Welsh, to describe the concepts of "cattle" and "good" is still used the same word. However, preserved, and much more tangible proof of the theory: even in the XX century from the Kyrgyz people as a major money used horse, smaller cuts - a sheep, and very very small change - sheep's clothing.

By minting of these coins of different nations to come in a variety of ways, but mostly metallic currency artificially implanted invaders. For example, it was with the Aztecs and Maya - until the emergence of Cortez, they easily make payments using coconuts.

A first, almost simultaneously and quite independently of each other, have a coin minted in China and in Asia Minor. Initially, the Chinese, like other peoples who lived on the shores of the Indian Ocean, were used as money cowrie shells.

In drevnekitayskom language, even the icon "money" in line with the figure cockleshells. Over time, whether cowrie longer suffice, or try the first forger - but the shells began to make copper and bronze.

As Lydia is thought to punch small round pieces of metal. First printing only guarantee the purity of the material, but soon began to mean a certain weight. So there were coins, with the help of merchants and conquerors quickly spread to the territory Ionii,
Greece and Persia.

Greek coins were to taste - every town has produced their own, as a sign of independence and autonomy. However, they differed only in appearance (for example, in Athens, they portrayed sovu, a symbol of the patron of the city of Athena Pallas) - The name was also common, dram, which originally meant in the first handful of grain. This sequel "to-cash" relationship, the time had to calculate the weight, and survived in the Bible: known talent before the coins were mean measure equal to 60 pounds of gold.

But back to the Greeks. In 407 BC during the war Spartans captured the Athenian silver mines, and the Athenians come to mint bronze coins with a thin silver coating. Naturally, from these "good" coins of the population is not eager to get rid, and the city was virtually destroyed.

Chinese emperors seem to have differed somewhat greater foresight. Copper coins are quiet - peaceful minted right up to 806 of our era, has not suddenly discovered that the copper inexorably coming to an end. Then decided not to waste the metal waste, and - for the first time in history - began to issue paper bank notes.

The experiment was successful, after 150 years of printing money on paper became the norm in the Middle Kingdom. Unfortunately, all ended tragically - the terrible inflation.

For inflation, we will return, but now is talk about money, who successfully survived to the present day. The most ancient, apparently, is the pound and pensions, coins called "penny" Saxon tribes started to die even before the conquest of the Vikings.

The origin of the name enveloped in mystery. According to one version, it goes back to the name of the Saxon King Pendé, on the other - was formed in consonance with the dishes, which smelt silver (the English word pan, meaning the pan seems related word penny, as evidenced by the existence of a similar pair in the German language: pfanne - pfennig ).

With respect to £, they appeared later. In the VIII century, in Britain there dump "sterling", corresponded 1 / 240 pound weight of silver. For the convenience of calculation 240 Sterling has been called "pounds", and eventually just "pound." And so it led, and even in 1717, when the decided to bring the gold standard, the pound has not finished its uschestvovanie, he "turned" to 7,32 g of pure gold. With time and forgot about this line, but there is still a pound.

Even more than the dollar has a long history. At first he was "German" and called the thaler, an abbreviation for "Joachim-staller, a silver coin with the image of St. Joachim, which were minted in 1519 at the end of the XIX century. After the reunification of Germany, the Germans switched to the modern brand, and the dollar continued its existence through the Spanish and English colonists.

By the time the money has long been felt strongly in the New World, but for convenience, the settlers became known as the U.S., all national currencies. The Americans already had cravings for all sorts of cuts, so instead of the English piece of eight (eighth) - What is the name of the continent the Spanish peso - they decided to draw cross eight. Later, she became well-acquainted us with the icon $.

At first the U.S. had gold and silver - so decided, in 1794 the Federal Government Philadelphia. In those days, in the same coin contained 24.75 g of pure gold. By 1934, the proportion decreased to 13.71 g, and the gold standard was formally repealed. Moreover, by this time have already lived U.S. paper or, more precisely - cotton. Since 1861, they were printed on special paper from a mixture of cotton and flax.

A year later, during the Civil War, to cover unforeseen expenses Army, the Federal Government decided to print the so-called "Continental", popularly called greenbacks ( "green"). In 1862 they had released 150 million, and in 1863 - another 300 million. As gold reserves provided they were not, by the end of the war, their real value was only 1 / 1000 of face value. There is even a saying "do not, and Continental, and the treatment they were withdrawn. A word - the more so that when printing in the course of today's dollars, too, are the green ink.

Such a collapse of "green" is quite natural, because they were ordinary paper, but are subject to inflation and more stable currency. Thus, during the Punic wars, the entire budget of Rome went to the army, so it was decided to gradually reduce the content of silver in coins. However, the "little" does not have: if the 250 was it was 40%, then just twenty years later it fell to just 4%. As usual in such cases, the yield was one - the monetary reform. It's just had to hold the emperor Diokletianu.

Experience the Romans had not any for whom lesson, inflation has become quite common. At 324, she struck Egypt, where for ten years, the cost of a pound of gold jumped from 300 thousand to 2.12 billion dinars. By the way, to devalue not only metal, chased the money, but also shells. For example, at the end of the XVIII century. in Uganda, a woman could be bought for two cowrie shells, and in 1860. such a purchase would cost in the thousand. The truth is worth noting that the price has been very stable and lasted nearly a hundred years, until after the Second World War to replace the cowrie came shillings. And women, in general, to sell almost stopped ...

The most ambitious is the disruption of money fell on the history of XX century. In the 1922-23 year in Germany, payment of salaries took place twice a day - the only way an opportunity to spend the money before they are fully depreciated. Inflation has reached such a magnitude and in Hungary in the years 1944-46 - the number plates issued to the new bank notes in circulation reached 27, while the cost of one gold Peng equaled $ 130 billion of paper.

Olga Romanova
vlasti.net

The current deficit has stabilized

Ministry of Finance of the U.S. on Thursday evening in his annual report to Congress on currency regimes in the world announced that the U.S. current-account deficit reached, at least a temporary stabilization. " According to the report, none of the major trading partners, the U.S. is not manipulating its currency for trade advantage, according to the criteria of Congress. The report noted that Japan has spent $ 119 billion in intervention in the foreign exchange market in the second half of last year and $ 60 billion in the first half.

China, as stated in the report, "has made many efforts to prepare for a flexible exchange rate regime."
Advanced dollar index, calculated by Federal Reserve on December 31, 2003. decreased by 12.9% from its most recent peak in February 2002. In the evaluation of currency regimes in order to decide whether there is a manipulation in order to obtain commercial advantage, the Treasury is investigating, in addition to courses directly to themselves, as the external balance, the accumulation of foreign reserves, macroeconomic trends, monetary and financial development, the state of institutional development and financial and exchange restrictions. U.S. current-account deficit rose as a percentage of GDP, with the first quarter of 1991., Reaching a temporary peak of 4.4% in the fourth quarter of 2000. before the reduction, in connection with the reduction of domestic and international activity, as stated in the report. "The current deficit has begun to grow again in the first quarter of 2002. With the restoration of the American economy. During the past seven quarters, the current deficit has reached at least a temporary stabilization in the region of 5% of GDP." The report says that because of the current deficit position of U.S. net investment (direct investment, evaluated at the current value of the stock market) fell to minus 2.6 trillion. $ On December 31, 2002., The latest date for which figures are available, from minus 2.3 trillion . $ at the end of 2001. Despite the large negative position, U.S. residents earn on their foreign investments in 2003. at $ 22 billion more than foreigners earn on their investments in the U.S.. This positive net income, said the report was the result of the fact that a large influx of net income from direct investment to compensate for the outflow of net income from portfolio investment.

Forex Magazine
based on Fxstreet.com

The U.S. market is much better prepared for terror

U.S. Treasury John Snow said on Thursday about a new terrorist attack against America, that if it happened, it would be less destructive for the U.S. financial markets than the attack of 11 September 2001.

While the interview program "Nightly Business Report", Snow said the U.S. authorities have worked hard with representatives of American financial markets, which actually closed down the national economy within a week or so after the attacks of September 11.

"I'm not sure we ever will be fully prepared for this, but we are certainly now much better prepared for such a tragic, horrific events, as were two years ago," he said.

A Snow interviewed after reports that Al Qaeda may be linked to the explosion on Thursday in Spain, which killed nearly 200 people and many more injured. The letter implied that the group, which is related to Al Qaeda, claimed responsibility for the attack.

In response to a question, Snow said that he did not think that the Spanish attack, which alienated the enthusiasm of investors in markets around the world, damage the national economic recovery. "I think that Americans understand how we are vulnerable to terrorist attacks, and that we stepped up the infrastructure, we have made it much more rigid and the prospects for a successful act of terrorism today is much lower," said Snow. "But we can not completely eliminate it, which is why we must always take care of our security," he added.

On other issues, Snow said he remains confident that China will move towards a more flexible currency by changing the current system of tying the yuan to the dollar. "I think they really want to do it. They realize that in order to be able to move for a revaluation, the flexibility that they say they intend to implement, they should strengthen the financial infrastructure," he explained.

China must create a package of their bad debts and sell them to investors as well as to strengthen its banking system, said Snow, adding to signs that they started to do so and recognized the need to tighten regulation of financial systems.

By (Reuters.com)

SCHOOL BEGINNINGS trader. Lecture 4

SCHOOL BEGINNINGS Trader
Lecture 4. Fundamental factors and market analysis

2.1. Introduction to fundamental analysis
The most important and difficult part of the currency dealing is the ability to analyze trends in the market, and consequently predict what factors and how to affect exchange rates. In the movement of prices laid down as quick profit, or otherwise - the possibility of rapid and substantial losses. Therefore, the correct prediction of market movements, assessment of events, as well as the manipulation of rumors and expectations - a necessary part of the broker or dealer and the pledge of his success. There are quite a number of factors that impact on the entire foreign exchange market as a whole and for individual currencies.

There are two basic ways to analyze the situation on the market - a fundamental and technical. The first is assessing the situation from the standpoint of political, economic and financial-credit policy. The second is based on the methods of graphic studies and analysis based on mathematical principles.

As part of fundamental analysis examines the various reports of the Monetary - the financial developments in the world, the phenomenon of political and economic life of both individual countries and the world community as a whole, which may influence the development of the foreign exchange market, the analysis, to a change in exchange rates are may result. Here is important information on the stock exchanges and large-type market-makers, interest rates of central banks, government economic policy, possible changes in the political life of the country, as well as all sorts of rumors and expectations. Fundamental analysis - one of the most difficult parts - and at the same time, one of the key parts of the work in the foreign exchange market. Conduct fundamental analysis is much harder than any other, because the same factors in different contexts is not the same impact on the market, or may become a critical absolutely insignificant. It is necessary to know the mutual communication and mutual influence of two different currencies, reflecting the linkages between the various States, the history of currencies to determine the combined effect of various economic measures and to establish a link between totally unrelated at first glance, the events. In addition to some original and most formal rules, it is most needed experience of working in the foreign exchange market.

Fundamental factors are estimated, usually from two positions:
In terms of impact on the official discount rate;
From the viewpoint of national economy.

2.2. Fundamental factors influencing the market FOREX

In general, fundamental analysis identifies four factors that directly influence the market:
Economic;
Political;
Rumors and expectations;
Force majeure.

Classification of news about the extent to which they expected:

Random and unexpected - usually news of political and natural origin, less economic (political instability in the country, war, natural disasters, etc.);
Planned and expected - usually economic news, less political nature.

The economic effects and its influence on market rates is based on the axiom that any currency is a derivative of the country's economic development and its value can be regulated with the help of certain economic measures.

Economic group influences on the market can be divided into the following components:
Data on the economic development of the country;
Trade negotiations;
Meetings of central banks;
Any change in monetary - credit policy;
Meeting of the G, economic or trade unions;
Statements of heads of central banks, heads of governments, eminent economists on the situation at the market rates, changes in economic policies, economic situation in the country, or their projections;
Intervention;
Adjacent markets;
Speculation.
Let us consider each group in more detail.

2.3. This country's economic development.
The principle effects of this subgroup is based on the axiom that the value of any currency is a derivative of the state of the economy of this country. The stability of the economy determines the interest of foreign investors to invest in it and, consequently, the demand for a currency. They include such key indicators as trade and balance of payments, inflation, unemployment, gross national product, etc.

In the FOREX market to develop a common system of quotations of currencies after the U.S. dollar. Thus, the development of the American economy and the value of U.S. dollar is an important, if not decisive, factor in determining the direction of the market, common to the major currencies. Therefore, the main attention of foreign exchange brokers or dealers sent to the U.S. dollar and his "behavior" that causes some reaction from other currencies. However, this does not diminish the influence of other factors - the policy of national banks, or the influence of related markets, which are described in brief below. Monthly or quarterly in the United States published the main indicators of economic development.

Trade negotiations.
Trade negotiations are an important part of economic policy in any country. In particular, the ratio of import and export provides an important indicator of economic development as the trade deficit. For the U.S. trade deficit is a major problem in the past few years, playing a major role in the fall of U.S. dollar against major European currencies. The result of trade negotiations is an immediate response to the market, sometimes more than significant.

The meetings of central banks.
The main task of central banks is to adjust the domestic economy - as the main task. In addition, the adjustment of the internal and external value of the currency as part of his duties. Therefore, any meeting of the central bank - or more precisely, its working committee - drew attention to the participants in the foreign exchange market. One of the main means of promoting, or, conversely, slowing economic growth, attracting foreign capital, the attractiveness of government bonds, and, as a result, the value of currency is the interest rate.

2.4. Changes in monetary - credit policy.
Such measures are rarely taken to regulate the value of currencies, most central banks or governments prefer other measures the impact on the market. Nevertheless, one example may be the recent package of measures developed by the Government of Japan exclusively for the purpose of reducing the cost of the Japanese yen on the world market (also known as supplementary budget). Its main objective is to reduce the attractiveness of investment in the Japanese economy, stimulating the outflow of Japanese capital abroad, tightening rules on foreign clients who have accounts at Japanese banks, etc.

Only the expectations on this package of measures the Japanese yen had dropped in price by nearly 400 points within two - three days. However, when expectations are not met, the reverse reaction of the market is several times higher than the original cheaper.

Meetings of Seven (G7), trade and economic alliances.
One of the objectives of the G is a regulated world economy and in particular to the specific situation in the world market rates. There is some agreement among the members of the G in this regard - Agreement SVOP. The outcome of the meeting of Group of Eight may be a decision for a joint intervention in the global foreign exchange market by several central banks or other measures to limit or, conversely, to stimulate the growth of the value of a currency. In recent times, such agreements may be even, not only by members - for example, is often manifested in the joint agreement of policies on the market rates between Japan, USA and Germany.

Meetings of trade unions, govern trade relations between countries or policy of the region may also have a strong impact on a particular currency. Appeal against the U.S. and Japan in the WTO (World Trade Organization, established in January 1994 to replace GATT) after the failure of the end of the next round of trade negotiations yen left with virtually no movement by nearly a week. Meetings IIF (international monetary union), giving estimates and assumptions about the current state of the world economy, and distribute credits, does not have a direct impact on the currency, although it may cause some reaction in the market. Rather, in this situation you can count on the determination of long-term development strategy for the market as a whole than on the immediate reaction.

2.5. Statements of Heads of Government, heads of central banks, leading economists about the market situation.

This is one of the factors that, in most cases, which was an immediate response to the market. Speech by the Swiss chapter of the National Bank of Lumera disinterestedness of Switzerland in its own strong currency 29 September 1995 led to a leap in the Swiss franc from 1.1400 to 1.1480 level for several minutes, and further to 1.1580 over the next hour. Another example could be a statement by a prominent economist Bergsteyna, who, along with unexpected numbers, impaired balance of trade dollars and unreasonable expectations about the supplementary budget of Japan, led to a catastrophic collapse yen in less than two days from 97.15 to 104.55 marks, offset by a two-week efforts of the Central Bank of Japan and the U.S. Federal Reserve. Quite often, especially under certain conditions, an address of a person can not only severely affect the behavior of a currency, but also fundamentally change the situation on the market.

If the fundamental news contradict the trend, while its impact on the dynamics of the market may be limited to an hour or several hours. If, however, a fundamental factor confirms the trend, it is his acceleration, followed by a rollback.
The cycle life of the fundamental factors:
Short cycle: no more than one day, for all the unexpected news.
Long cycle: from a few weeks to several years, all factors associated with the overall state of national and world economy (the dynamics of inflation, unemployment and interest rates, etc.).

2.6. The interdependence between different countries is

The dollar zone - the Americas, led by the United States;
sterling area - UK and its former colonies;
yenovaya zone - Asia, led by Japan;
Zone EURO - Western, Central and parts of Eastern Europe led by Germany.

"Buy rumor - sell the facts":
- At the time of occurrence of hearing the main thing - to make a deal quickly because the market begins a new and powerful wave that can form strong trends;
- Traders are interested in listening to its confirmation or refutation. It is important to have quickly "jumping off the train."

2.7. Stock market and its key figures

At the exchange rate impact factors reflecting the state of the economy of the country:
Indicators of economic growth (gross domestic product, industrial production, etc.);
The trade balance, the degree of dependence on external sources of raw materials
The growth of money supply in the domestic market
Inflation and inflationary expectations
The level of interest rates
Solvency of the country and the credibility of the national currency in the world market
Speculation in the foreign exchange market
The development of other sectors of the global financial market, such as the securities market, competing with the foreign exchange market.

Money in a foreign country

Interest rates differential (the difference in interest rates)

In the form of securities: T-bills (treasury securities)

USA - Bonds
UK - Gilts
Germany - Bunds
Japan - JGB

USA - The budget deficit is negative
Japan - the budget deficit positively
This puts Japan in the main bonds USA about 60% of the market.
The Central Bank of Russia puts about 80% of its reserves in bonds USA.

Stock Indices
DJIA-USA
Nikkey - 225 - Japan
FTSE - 100 - UK
CAC - 40 - France
DAX - 30 - Germany
Hang Seng - HK (Hong Kong)

Dow Jones (DJI)
There are 4 of the Dow - Jones.
Industrial Dow - Jones (The Dow Jones Industrial Average - DJIA) - the simple average of the movement of share prices the 30 largest industrial corporations. Industrial Dow - Jones is the oldest and most common among all indicators of the stock market. Its composition is not constant: its components may vary depending on the positions of the largest industrial corporations in the U.S. economy and the market, but in the modern world, such cases are rare. In principle, it had to make up 15 to 20% of the market value of shares traded on the New York Stock Exchange. This index is calculated by adding up the prices of the included stock and dividing this sum for a fixed denominator (which is adjusted by the amount of splitting of shares and dividends in the form of shares, constituting over 10% of the market value of output, as well as replacement components, and mergers and acquisitions. Dow - Jones quoted in points. Recently he appeared on futures contracts in Chicago.

Transport Dow - Jones (The Dow Jones Transportation Average - DJTA) - average rate, which characterizes the movement of stock prices 20 transportation companies (airlines, rail and road companies).
Municipal Dow - Jones (The Dow Jones Utility Average - DJUA) - the average movement of share prices on 15 companies involved in gas and electricity.
Composite Dow - Jones (The Dow Jones Composite Average - DJCA) - an indicator on the base of industrial, transport and utilities Dow - Jones.

Index Standard and pauerz "(S & P)
The index is published independently by Standard & pauerz. It is made in two versions - for shares of 500 corporations and 100 shares of corporations.

S & P - 500 is a market value weighted index of 500 shares of corporations that are represented in it in the following proportions: 400 industrial companies, 20 transportation, 40 utility and 40 financial companies. It includes mainly shares of companies listed on the New York Stock Exchange, but there are also stocks of some companies that are traded on the American Stock Exchange and outside the stock exchange turnover. The index represents approximately 80% of the market value of all issues, listed on the New York Stock Exchange. This index is more complex compared to the Dow - Jones, but it is also more accurate because it represented a larger number of shares and corporate shares of each corporation are weighted by the amount of the value of all shares outstanding in the hands of shareholders. Futures and options thereon traded on the Chicago Mercantile Exchange.

S & P - 100. The index is calculated at about the same again as the index of 500 shares of corporations, but is made up of shares in corporations, for which there is recorded at the Chicago options exchange options. This is mainly industrial corporations.

Index of the New York Stock Exchange (NYSE Index)

This index is a weighted market value index movements in equity prices of all corporations, to register their securities on the New York Stock Exchange, that is, in fact, this figure represents the average price per share for all companies on the New York Stock Exchange, the weighted market value of shares in each corporation (with appropriate adjustments for the factors of the fragmentation of shares, mergers and acquisitions). In contrast, the Dow - Jones, which is expressed in points, the index of NYSE expressed in dollars. Transactions in options on this index are carried out at the New York Stock Exchange. Operations with futures contracts are carried out at the New York Futures Exchange, which is a unit of the New York Stock Exchange.

Indices of the American Stock Exchange (AMEX)

American Stock Exchange publishes two major index that is calculated on a completely different manner.
The main market index of the American Stock Exchange (AMEX Major Market Index) is a simple average of the price movement of 20 leading industrial corporations. He was conceived the American Stock Exchange as a sort of substitute for the industrial index Dow - Jones. Although it is calculated and published by the American Stock Exchange, it consists of shares of corporations listed on the New York Stock Exchange. Remarkably, 15 of which are also components of the industrial index Dow - Jones. Transactions in futures on the index are carried out at the Chicago Stock Exchange trading.

The index of the market value of the American Stock Exchange (AMEX Market Value Index) is calculated on a different basis: it is an indicator, weighted by market value of all issued shares in those corporations that are included in it as components. For the first time it was published in September 1973. It includes, as components of more than 800 issues of shares of securities of corporations of all major industry groups registered on the American Stock Exchange, including, in addition to ordinary shares, American depositary certificates and subscription certificates. From a technical point of view, it is unique by virtue of the fact that in his calculation, it is expected that dividends in the form of cash paid to members of its membership shares, reinvested, and on that basis they will be reflected in the index. Options on the index are traded on the American Stock Exchange.

Postcode off traffic (NASDAQ)

National Association of Securities Dealers calculates a number of indices, representing off-trafficking in general and paper companies of certain branches. The main index is the NASDAQ, which includes as a component stock of about 3500 companies (excluding listed on stock exchanges). This index is an indicator, weighted by market value of its components.
For the first time, it was calculated in February 1971.
Transactions in options and futures on this index are carried out at the Chicago Mercantile Exchange.
The drop in stock index led to the downfall of the currency.

Central banks

CB monitor inflation in the country, the national currency and seek to regulate them with the help of three key interest rates:

1. Discount Rate - Discount rate. The interest rate under which the Central Bank of commercial bank lending.
British rates are quite high, so they have a big interest of foreign investors.

2. Interest rate - Repo rate. Interest rate applicable to the Central Bank transactions with commercial banks and other lenders for the purchase (accounting) of the public treasury obligations. CB thus regulates capital market loan. Fed Funds (rate RepoUSA)

3. Lombard rate - Lombard rate. Interest rate applied by the Central Bank under the pledge of real estate, gold, currency values in issuing loans to commercial banks.

As the interest rates increased business activity and rising inflation. The decline in interest rates leads to a cheaper currency. Raising interest rates leads to a reduction in business activity, reducing inflation and the cost of the national currency. In modern conditions the method of influence on the rate of national currency continues to be the practice of buying and selling by central banks, foreign currency, known as currency intervention.

Central banks:

USA:
FED - Federal Reseve System;
The decision to change the rates adopted FOMC-Federal Open Market Committee, which met every six weeks, two days: Monday and Tuesday.
Chairman of the Board - Alan Greenspan

Germany:
Bundesbank (BBK, Buba) - The Central Bank of Germany
Buba cooncil meeting - meeting Buba - every 2 weeks on Thursdays;
Chairman - Ernst Welteke

Great Britain:
Bank of England - BOE;
Session 1 times per month;
President - Eddie George

Switzerland:
Swiss National Bank (SNB);
The meeting - every Thursday;
President - Hans Meyer

Japan:
Bank of Japan (BOJ);
Meeting 24 hours a day;
Chairman of the Board - Masaru Hayami

EU:
Europian Central Bank (ECB);
Chairman - Jean-Claude Trichet, President of the ECB
Along with central banks in the foreign exchange market operated brokerage firm, who, working with a specific bank, acted as intermediaries between the seller and the buyer's currency. To certain advantages of working through a broker can be anonymous when conducting transactions, continuous process, quotes, and the opportunity to propose their own prices.

In recent decades in the foreign exchange market has changed the nature of trade with the shift in the urgency of changing commerce: had a significant increase in transactions where performance is happening in the future. All this has led, on the one hand, to increased susceptibility of the foreign exchange market to market changes and the significant increase of currency fluctuations, and on the other hand, to increase opportunities for high-performance investment. In many markets, along with the widespread operations of buying and selling of currency transactions received from derivative financial instruments - currency and financial futures and options.

Examples of these exchanges have long been recognized by the world's centers of currency trading can be:
The London International Financial Futures Exchange (London International Financial Futures Exchange - LIFFE),
European option exchange in Amsterdam (European Options Exchange - EOE),
Urgent German Market in Frankfurt (Deutsche Terminboerse - DTB),
The Singapore Exchange (Singapore International Monetary Exchange - SIMEX) (Sydney Futures Exchange - SFE) and
Market immediate trade in Sydney.

Inflation

CPI (Consumer Price Index - CPI) - is the index of retail prices.

The index of producer prices (Producer Price Index - PPI) - this is wholesale price index.

The higher these indices, the more expensive local currency. It is believed the growth of these indices to 3% per year.

Monetary Aggregates:
M1, M2, M3, M4 - MONEY SUPPLY - monetary support.
M1 - cash in circulation, banknotes and coins;
M2 = M1 + funds settlement and current accounts in banks, traveler's checks;
M3 = M2 + time deposits in banks;
M4 = M3 + valuable state papers.
The rapid growth of money supply, both in cash and in non-cash form, has a downward impact on the currency.

Gross Product (Gross Domestic Product - GDP)
The higher the GDP, the better the economy. Optimal change - up to 3% per year if higher - feedback. You must enter a higher bid that would cause the national currency appreciation.
CPI and PPI are considered once a month, M / M.
GDP - quarterly Q / Q and are converted to year Y / Y.

Financial performance (Treasure Statement)
Income and expenses of citizens
Personal Income (Personal Income)
A sense of consumer willingness to spend money man (Consumer Sentiment)
The cost of construction (Construction Spending)
Construction (Hosing Starts)
Appeal for permission (Building Permits)
New home prices (New Houses Sales)
Current prices (Existing Houses Sales).
The unemployment rate (Unemployment Rate) - is considered to be once a month. If you raise the rate of national currency desheveet.
Primary treatment of unemployment (Imital Claims).
Ongoing Treatment (Continuing Claims).
The increase of these indicators leads to a cheaper currency.
Retail (Retail Sales) - better than the turnover, the stronger currency.
Dealer Orders for durable goods (Durable Goods).
All of the above information is on Moscow time, in 16:30 and 18:30 (Reuters, CQG)

JAPAN

Japan's fiscal year ends March 31. By the end of the year, usually to determine the balance transferred a large quantity of foreign currency into yen, which tends to rise in price. Many insurance companies of Japan are the largest players in the market: USD / JPI, USD / DEM, DEM / JPI, CHF / JPI, GBP / JPI. Big problem in Japan is an aging population. Hold on for many years, the interest rate has caused a small shift in the banking sector, but, nevertheless, Japan's banks remain the major world banks. Strengthening of South-east economy in the long term will give a chance to become the main currency of yen for the Asian region.

SWITZERLAND

Switzerland is not going to join the EU, thus stressing its independence. The attraction of CHF remains quite high, it's called "saving the currency." In moments of crisis traders from all over the world automatically buy Swiss francs, resulting in CHF usually much stronger. For example, it was on 11 September 2001, when the world learned of the terrorist attacks in New York.

UK

The availability of high interest rates in England sets the world's great interest of speculators, which affects the economic performance in general. England - a recognized global financial center, the main offices of the largest investment giants are located here in the country operates a very strict legislation governing the financial activities of companies, banks and stock exchanges.

CARLO, FOREXTRADER.RU
SUCCESSFUL SCHOOL Trader
trader_karlo@mail.ru