How do changes in components in the balance of payment influence the value of Exchange Rate? (1 Viewer)

sab13562

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I know persistent cads can undermine investor confidence = capital flight = depreciation.
Increased foreign investment = Kafa surplus, and appreciation as demand for AUD increases.
BOGS surplus = appreciation as demand for AUD increases?
What else can I mention?
 

notme123

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I know persistent cads can undermine investor confidence = capital flight = depreciation.
Increased foreign investment = Kafa surplus, and appreciation as demand for AUD increases.
BOGS surplus = appreciation as demand for AUD increases?
What else can I mention?
correction: yes cad can cause sudden shift in confidence but persistent npy deficits mainly undermine confidence, But you can say however, pitchford thesis cad shouldnt be an issue for govt and investment confidence.
 

uniqueusername1

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I know persistent cads can undermine investor confidence = capital flight = depreciation.
Increased foreign investment = Kafa surplus, and appreciation as demand for AUD increases.
BOGS surplus = appreciation as demand for AUD increases?
What else can I mention?
Personally I don't like this essay question.

But, I don't recommend writing about the first point you made -> Loss in investor confidence. This is because your going to need to support it with evidence and Australia hasn't experienced a sudden shift in investor confidence (although Argentina has and some Asian countries) due to its mineral abundance giving investors confidence it can re-finance the deficit.

Maybe you could also talk about NPY.

Now you've got KAFA, NPY AND BOGS = 3 bodies.
 

sab13562

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correction: yes cad can cause sudden shift in confidence but persistent npy deficits mainly undermine confidence, But you can say however, pitchford thesis cad shouldnt be an issue for govt and investment confidence.
Ok thanks.
 

sab13562

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Personally I don't like this essay question.

But, I don't recommend writing about the first point you made -> Loss in investor confidence. This is because your going to need to support it with evidence and Australia hasn't experienced a sudden shift in investor confidence (although Argentina has and some Asian countries) due to its mineral abundance giving investors confidence it can re-finance the deficit.

Maybe you could also talk about NPY.

Now you've got KAFA, NPY AND BOGS = 3 bodies.
Tysm!
 

notme123

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Personally I don't like this essay question.

But, I don't recommend writing about the first point you made -> Loss in investor confidence. This is because your going to need to support it with evidence and Australia hasn't experienced a sudden shift in investor confidence (although Argentina has and some Asian countries) due to its mineral abundance giving investors confidence it can re-finance the deficit.

Maybe you could also talk about NPY.

Now you've got KAFA, NPY AND BOGS = 3 bodies.
to add to this post, the narrow npy deficit rn has mitigated depreciation since the exchange rate plunge last year. You could talk about investor confidence but you might have to say however, globalisation and finanical dereg has made eternal instability more acceptable
 

sab13562

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to add to this post, the narrow npy deficit rn has mitigated depreciation since the exchange rate plunge last year. You could talk about investor confidence but you might have to say however, globalisation and finanical dereg has made eternal instability more acceptable
Should I mention favourable global conditions too, like low cash rates = smaller CAD?
 

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