IFS Currency Assignment

8/8/2019 IFS Currency Assignment

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INTERNATIONALFINANCEASSIGNMENT

ONCURRENCIES

Submittedto

Mr. Rishi Mehra

Prepared byAbhijeet Singh Kadian

Roll No. 66

III-SemesterGlobal Business Operations-SRCC

THE CURRENCIES CHOSEN WERE: BRITAIN POUND, UNITED STATESDOLLAR , CHINESE YUAN, UAE DIRHAM, UNITED STATES MINOROUTLYING ISLANDS DOLLARS , URUGUAY PESO ..VARIOUS ASPECTS LIKE THEIR ORIGIN , HISTORY, CIRCULATION ANDEXCHANGE RATES HAVE BEEN COVERED.


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BRITAIN (UNITED KINGDOM), POUNDS

The history of the Pound Sterling

The pound sterling of the United Kingdom was originally the value of one Troy pound ofsterling silver, hence the name: Pound Sterling.

The Pound Sterling was adopted as the Royal Chartered Bank of England's currency in1694. England's national debt increased exponentially from 1700 to the mid 1790's thusmaking it extremely difficult to exchange banknotes for gold. The subsequent strain onthe nation's financial system led to what was known as the Restriction Period when inorder for the bank to play catch up with its' finances, it issued banknotes of one and twopounds in place of the actual coinage.

In further efforts to increase the stability of the pound, the Bank Charter Act of 1844introduced the Bank of England as the only bank in the United Kingdom allowed to issuebanknotes as a legal currency. This meant that all other banks in England and Wales werelegally obliged to obtain their banknotes from the Bank of England. In Scotland,however, The Banknote (Scotland) Act of 1845 allowed Scottish banks to continue toissue their own Pound Sterling banknotes.

Having learned from the effects that inflation had on the financial market from theRestriction Period the Bank of England began to control the production of banknotes.This ensured that banknotes were only produced when there were gold reserves to backthem. The Bank of England became a major lender to other commercial banks. As it wasdifficult to keep backing banknotes with gold standard while still lending to other banksthe Bank of England had to set interest rates high to maintain the gold standard supply.

Shortly before the First World War, the treasury issued the small and simple cipherwatermarked stamp paper 10/- and 1 banknotes. The Bank of England tried to return togold standard after the war, but gold standard could no longer continue to work in thegrowing financial market. From 1932 to the present day, the only limitation on issuingbank notes is that of the UK Parliament's approval.

One pound is divided into 100 pence, the singular of which is "penny".The symbol for the penny is "p"; hence an amount such as 50p (0.50)is usually pronounced "fifty pee" rather than "fifty pence".

Prior to decimalisation in 1971, each pound was divided into twentyshillings, with a shilling equal to 12 pence. The symbol for the shillingwas "s" not from the first letter of the word, but rather from theLatin word solidus. The symbol for the penny was "d", from the Frenchword denier (sum of money), which in turn was from the Latin worddenarius.


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After Decimal Day, the value of one penny was therefore different fromits pre-decimalisation value. For the first few years after 71, the newtype of penny was commonly referred to as a new penny. Coins fordenominations of p, 1p, 2p, 5p, 10p and 50p all bore the name NewPence. The half pence was dropped in1984. The British decimal Twenty

Pence (20p) coin was issued in June 1982 to fill in the obvious gapbetween the Ten Pence and Fifty Pence coins; it rapidly gainedacceptance. The one pound coin was introduced in 1983 to replace theBank of England One Pound note. The two pound coin was introducedin 1998 (dated 1997). Although it has been issued from 86 - 96 as acommemorative coin. Twenty-Five Pence and Five Pounds have beenissued as commemorative coins.

The & Rarely the L is used. Both symbols derive from libra, the Latinword for "pound".

Pound sterling was used as the currency of the British Empire. As thisbecame the Commonwealth of Nations, dominions introduced theirown currencies (such as the Australian pound and Irish pound) firstpegged to sterling, and later breaking parity (Australia in 1931 andIreland in 1979).

Banknotes issues in UK 5, 10, 20, 50

Forex History issues:

Sterling unofficially moved to the gold standard from silver thanks toan overvaluation of gold in England that drew gold from abroad andoccasioned a steady export of silver coin, in spite of a re-evaluation ofgold in 1717 by Sir Isaac Newton, Master of the Royal Mint.

In common with all other world currencies, there is no longer any linkto precious metals. The U.S. dollar was the last to leave gold, in 1971.The pound was made fully convertible in 1946 as a condition forreceiving a U.S. loan of US$3.75 billion in the aftermath of World WarII.

Since leaving gold, there have been several attempts to peg the valueof the pound to other currencies, initially the U.S. dollar.

Under continuing economic pressure, and despite months of denialsthat it would do so, on September 19, 1949, the government devaluedthe pound by 30%, from US$4.03 to US$2.80. pound was eventuallydevalued by 14.3% to US$2.41 in November 1967.


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With the break down of the Bretton Woods system not least becauseBritish currency dealers created a substantial Eurodollar market thepound was floated in the early 1970s and so subject to a marketvaluation.

From 23 June 1972 the Chancellor Mr Barber floated the and told MPsthe trade balance had deteriorated in the past couple of months and ithad become necessary to shore up sterling by using the Bank ofEngland's reserves. The Chancellor went to Luxembourg on 26 June toexplain his decision to float the pound to the finance ministers of thesix Common Market countries.He assured them the pound would return to operating within fixedtrading bands in time for Britain to join its European partners in 1973.

In 1998 the conservative government decided to shadow the WestGerman currency. In 1990 the government joined the ERM (European

Exchange Rate) Mechanism , with the pound set at DM 2.95. However,the country was forced to withdraw from the system on BlackWednesday (September 16, 1992) as the exchange rate becameunsustainable. Speculator George Soros made US$1 billion fromshorting the pound. Ultimately proponents of a lower GBP/DMexchange rate were vindicated as the cheaper pound encouragedexports and contributed to the economic prosperity of the 1990s. Inthe mid to late nineties the rose in value and many claimed thedecline in the British export industry was due to the high exchangerate difference with the Euro and the pound.

Gibraltar and the islands of Guernsey, Jersey, Saint Helena, theFalkland Islands and the Isle of Man, which are not part of the UK, alsoissue their own currencies, which are fixed to the value of sterling.

Bank of England - (Should be Bank of Britain): known as "The Old Ladyof Threadneedle Street" The Bank of England is the central bank of theUnited Kingdom. Sometimes known as the 'Old Lady' of ThreadneedleStreet, the Bank was founded in 1694, nationalised on 1 March 1946,and gained independence in 1997. Standing at the centre of the UK's

financial system, the Bank is committed to promoting and maintainingmonetary and financial stability as its contribution to a healthyeconomy.

On behalf of HM Treasury, the Bank of England manages the ExchangeEqualisation Account, which holds the UKs gold and foreign exchangereserves. As part of this role, it manages the issuance of foreigncurrency debt and has also recently carried out a series of gold


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auctions. Subject to policy objectives, these reserves may be used toattempt to influence the exchange rate.

One of the Bank of England's two core purposes is monetary stability.Monetary stability means stable prices - low inflation - and confidence

in the currency. Stable prices are defined by the Government'sinflation target, which the Bank seeks to meet through the decisions oninterest rates taken by the Monetary Policy Committee. The MonetaryPolicy Committee sets the Bank of England's official rate, the maininstrument of monetary policy. The Bank implements this rate throughits framework for operations in the sterling money markets.

The Bank deals in the foreign exchange market as part of its day-to-day management of the "Exchange Equalisation Account" - which holdsthe UK's foreign currency and gold reserves. These may be used,subject to policy objectives, to attempt to influence the exchange rate

in case of need. The Bank also operates in the foreign exchangemarket on its own behalf, and acting on behalf of customers.

The Bank of England has been issuing banknotes for over 300 years.During that time, both the notes themselves and their role in societyhave undergone continual change. From todays perspective, it is easyto accept that a piece of paper that costs a few pence to produce isworth five, ten, twenty or fifty pounds. Gaining and maintaining publicconfidence in the currency or, to put it another way, preserving itsvalue and integrity, is a key role of the Bank of England and one whichis essential to the proper functioning of the economy. Other banks in

the UK that issue banknotes include the Royal Bank of Scotland, theBank of Scotland, Clydesdale, the Bank of Ireland, First Trust, NorthernBank and Ulster Bank.

Participating Members

The pound sterling is only used in the United Kingdom of Great Britainand Northern Ireland and the following British dependencies outside

the UK: The Isle of Man, the States of Jersey and the States ofGuernsey. The Bank of England prints and distributes money forEngland and Wales. The Bank of Ireland, the First Trust Bank, theNorthern Bank, and the Ulster Bank print the notes for NorthernIreland. The Bank of Scotland, the Royal Bank of Scotland, and theClydesdale Bank print and distribute the notes for Scotland.


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Since Pound Sterling bank notes are printed in different parts of theUK, the design differs depending on where they are printed. Regardlessof the region where the notes are printed, they should be acceptedanywhere in the United Kingdom as legal tender. However, somepeople often do not recognise a 'different' looking note from elsewhere

in the UK and subsequently consider it to be a foreign currency.

Denominations:Coins:

1 penny or 1/100 pound2 pence or 1/50 pound5 pence or 1/20 pound10 pence or 1/10 pound20 pence or 1/5 pound50 pence or 1/2 pound1 pound2 pounds

Banknotes:5 pounds10 pounds20 pounds50 pounds

SPECIMENS:


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CIRCULATION:

All UK coins are produced by the Royal Mint. The same coinage is usedacross all countries of the United Kingdom (England, Scotland, Walesand Northern Ireland). Unlike banknotes, local issues of coins are notproduced in these regions. The pound coin until 2008 has been

produced in regional designs, but these circulate equally in all parts ofthe UK (see UK designs, below).

Every year, newly minted coins are checked for size, weight, andcomposition at a Trial of the Pyx. Essentially the same procedure hasbeen used since the 13th century. Assaying is now done by theWorshipful Company of Goldsmiths on behalf of HM Treasury.


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As of March 2007, the total value of coinage in circulation is estimatedat three and a half billion pounds, of which the 1 and 2 coinsaccount for over two billion pounds. The 1p and 2p coins from 1971 arethe oldest standard-issue coins still in circulation.

Coins from the British dependencies and territories that use the poundas their currency are sometimes found in change in other jurisdictions.Strictly they are not legal tender in the United Kingdom and tend not tobe accepted by UK traders and some banks. However, since they havethe same specifications as UK coins, they are sometimes tolerated incommerce, and can readily be used in vending machines.

UK-issued coins are, on the other hand, generally fully accepted andfreely mixed in other British dependencies and territories that use thepound.

An extensive coinage redesign was commissioned by the Royal Mint in2005, and new designs were gradually introduced into the circulatingBritish coinage from summer 2008. The pre-2008 coins will remainlegal tender and are expected to stay in circulation for the foreseeablefuture

EXCHANGE RATE:

1 pounds = 71.9172 INR

1 INR = 0.0139049 pounds

1 pound = 1.61173 $

1 USD = 0.620451 pounds


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CHINESE YUANLiterally translated as "the people's currency" the renminbi (RMB) has been the currencyof China for over 50 years. It is also known as the Chinese yuan (CNY) and by the

symbol ''.For many years, the renminbi was pegged to the U.S. dollar. In 2005, it was officiallyunpegged and as of April 2009, had an exchange rate of 6.8 RMB to $1 U.S. dollar.

RENMINBI'S BEGINNINGS:

The renminbi was first issued on December 1, 1948 by the Chinese Communist Party'sPeople's Bank of China.

At that time, the CCP was deep into the civil war with the Chinese Nationalist Party,

which had its own curency, and the first issuance of the renminbi was used to stabilizeCommunist held areas which assisted in a CCP victory.

After the defeat of the Nationalists in 1949, China's new government addressed theextreme inflation that plagued the old regime by streamlining its financial system andcentralizing foreign exchange management.

SECOND ISSUE:

In 1955, the People's Bank of China, now China's central bank, issued it's second seriesof the renminbi that replaced the first at a rate of one new RMB to 10,000 old RMB,

which has remained unchanged since.A third series of RMB was issued in 1962 which used multi-color printing technologyand used hand-engraved printing plates for the first time.

In this period, the RMB's exchange value was unrealistically set with many westerncurrencies which created a large underground market for foreign exchange transactions.


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With China's economic reforms in the 1980s, the RMB was devalued and became moreeasily traded, creating a more realistic exchange rate. In 1987, a fourth series of RMBwas issued featuring a watermark, magnetic ink and fluorescent ink.

In 1999, a fifth series of RMB was issued, featuring Mao Zedong on all notes.

COINS

In 1955, aluminium 1, 2 and 5 fen coins were introduced. In 1980,brass 1, 2, and 5 jiao and cupro-nickel 1 yuan coins were added,although the 1 and 2 jiao were only produced until 1981, with the last5 jiao and 1 yuan issued in 1985. In 1991, a new coinage wasintroduced, consisting of an aluminium 1 jiao, brass 5 jiao and nickel-clad-steel 1 yuan. Issuance of the 1 and 2 fen coins ceased in 1991,

with that of the 5 fen halting a year later. The small coins were stillmade for annual mint sets, and from the beginning of 2005 again forgeneral circulation. New designs of the 1 and 5 jiao and 1 yuan wereintroduced in between 1999 and 2002.

The use of coins varies from place to place. For example, coins aremore often used for values less or equal to 1 yuan in Shanghai andShenzhen but banknotes of the lower value are more often used thancoins in Beijing and Xi'an. Coins are used far less than banknotes inChina nowadays. Use of coins in self-service ticket vending machinesat metro stations may have contributed to the relatively frequent use

of coins in Shanghai.

INTERNATIONAL USE

The People's Republic of China has made tentative steps toward establishment of therenminbi as an international currency using Hong Kong as a launching pad wherecurrency restrictions regarding renminbi denominated bank deposits and financialproducts were greatly liberalized in July, 2010.In 2010 renminbi denominated bondswere reported to have been purchased by Malaysia's central bankand that mcdonald's had

issued renmimbi denominated corporate bonds through Standard Chartered Bank of HongKong.[13]

USE AS A CURRENCY OUTSIDE CHINA

The two special administrative regions, Hong Kong and Macau, have their ownrespective currencies. According to the "one country, two systems" principle and thebasic laws of the two territories, national laws generally do not apply. Therefore, the


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Hong Kong dollar and the Macanese pataca remain the legal tenders in the two territories,and renminbi, although sometimes accepted, is not legal tender. Banks in Hong Kongallow people to maintain accounts in RMB.

The RMB had a presence in Macau even before the 1999 return to the People's Republic

of China from Portugal. Banks in Macau can issue credit cards based on the renminbi butnot loans. Renminbi based credit cards cannot be used in Macau's casinos.

The current Republic of China government in Taiwan believes wide usage of therenminbi would create an underground economy and undermine its sovereignty. [18]

Tourists are allowed to bring in up to 20,000 renminbi when visiting Taiwan. Theserenminbi must be converted to the New Taiwan dollar at trial exchange sites in Matsuand Kinmen.The Chen Shui-bian administration insisted that it would not allow fullconvertibility until the mainland signs a bilateral foreign exchange settlement agreement,though president Ma Ying-jeou has pledged to allow full convertibility as soon aspossible.

The renminbi is circulated in some of China's neighbors, such as Pakistan, Mongolia andnorthern part of Thailand.Cambodia welcomes the renminbi as an official currency andLaos and Myanmar allow it in border provinces. Though unofficial , Vietnam recognizesthe exchange of the renminbi to the ng.

VALUE

For most of its early history, the RMB was pegged to the U.S. dollar at 2.46 yuan per

USD (note: during the 1970s, it was appreciated until it reached 1.50 yuan per USD in1980). When China's economy gradually opened in the 1980s, the RMB was devalued inorder to improve the competitiveness of Chinese exports. Thus, the official RMB/USDexchange rate declined from 1.50 yuan in 1980 to 8.62 yuan by 1994 (lowest ever on therecord). Improving current account balance during the latter half of the 1990s enabled theChinese government to maintain a peg of 8.27 yuan per USD from 1997 to 2005.

As of August 2, 2010, the yuan is valued at 14.7 US cents (or 6.796 per US dollar), [23]

which is 0.112 (or 8.89794 per euro).

DEPEGGED FROM THE U.S. DOLLAR

On July 21, 2005, the peg was finally lifted, which saw an immediate one-off RMBrevaluation to 8.11 per USD. The exchange rate against the euro stood at 10.07060 yuanper euro.

However the peg was reinstituted unofficially when the financial crisis hit: "Underintense pressure from Washington, China took small steps to allow its currency to


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strengthen for three years starting in July 2005. But China "re-pegged" its currency to thedollar as the financial crisis intensified in July 2008."

On June 19, 2010, the Peoples Bank of China released a statement simultaneously inChinese and English indicating that they would "proceed further with reform of the RMB

exchange rate regime and increase the RMB exchange rate flexibility." The news wasgreeted with praise by world leaders including Barack Obama , Nicolas Sarkozy andStephen Harper. The pboc maintained there would be no "large swings" in the currency.The RMB rose to its highest level in five years and markets worldwide surged onMonday, June 21 following China's announcement.

However China has simply shifted their reserves from dollar accounts to accounts in theircompetitor nations, leading these other nations to invest in dollars to keep their owncurrencies down. The result has been an international currency war.

MANAGED FLOAT

The RMB is now moved to a managed floating exchange rate based on market supplyand demand with reference to a basket of foreign currencies. The daily trading price ofthe U.S. dollar against the RMB in the inter-bank foreign exchange market would beallowed to float within a narrow band of 0.3% around the central parity published by thePeople's Bank of China (PBC); in a later announcement published on May 18, 2007, theband was extended to 0.5%.The PRC has stated that the basket is dominated by theUnited States dollar, Euro, Japanese yen and South Korean won, with a smallerproportion made up of the British pound, Thai baht, Russian ruble, Australian dollar,Canadian dollar and Singapore dollar.

On April 10, 2008, it traded at 6.9920 yuan per US dollar, which is the first time in morethan a decade that a dollar bought less than seven yuan,. And at 11.03630 yuan per euro.

Beginning in January 2010, Chinese and non-Chinese citizens have an annual quota tochange a maximum of 50,000 USD. Exchange will only proceed if the applicant appearsin person at the relevant bank and presents his passport or his Chinese ID; these deals arebeing centrally registered. The maximum withdrawal is 10,000 USD per day, themaximum purchase quota of USD is 500 per day. This stringent management of thecurrency leads to a bottled-up demand for exchange in both directions. It is viewed as amajor tool to keep the currency peg, preventing inflows of 'hot money

A shift of Chinese reserves into the currencies of their other trading partners has causedthese nations to shift more of their reserves into dollars, leading to no great change in thevalue of the Renminbi against the dollar.[34]

FUTURES MARKET

Renminbi futures are traded at the Chicago Mercantile Exchange. The futures are cash-settled at the exchange rate published by the People's Bank of China.


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PURCHASING POWER PARITY

Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power

parity analysis.

The World Bank estimated that, by purchasing power parity, one Internationaldollar was equivalent to approximately RMB1.9 in 2004.[36]

The International Monetary Fund estimated that, by purchasing power parity, oneUnited States dollar was equivalent to approximately RMB3.462 in 2006,RMB3.621 in 2007, and RMB3.798 in 2008.[37]


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UNITED STATES DOLLAR

The United States dollar (sign: $; code: USD) is the official currency of the UnitedStates of America. The U.S. dollar is normally

The United States dollar (sign: $; code: USD) is the official currency of the United

States of America. The U.S. dollar is normally abbreviated as the dollar sign, $, or

as USD orUS$ to distinguish it from other dollar-denominated currencies and from

others that use the $ symbol. It is divided into 100 cents.

The U.S. dollar is the currency most used in international transactions and is one of the

world's reserve currencies.[13] Several countriesuse it as their official currency, in manyothers it is the de facto currency,[14] and it is also used as the sole currency in some British

Overseas Territories.

HISTORY

The first dollar coins issued by the United States Mint (founded 1792) were similar in

size and composition to the Spanish dollar. The Spanish, U.S. silver dollars, and Mexicansilver pesos circulated side by side in the United States, and the Spanish dollar and

Mexican peso remained legal tender until 1857. The coinage of various English colonies

also circulated. The lion dollar was popular in the Dutch New Netherland Colony (New

York), but the lion dollar also circulated throughout the English colonies during the 17th

century and early 18th century. Examples circulating in the colonies were usually worn

so that the design was not fully distinguishable, thus they were sometimes referred to as

"dog dollars".[28]

The U.S. dollar was created and defined by the Coinage Act of 1792. It specified a"dollar" to be based in the Mexican peso at 1 dollar per peso and between 371 and

416 grains (27.0 g) of silver (depending on purity) and an 'eagle" to be between 247 and

270 grains (17 g) of gold (again depending on purity). The choice of the value, 371 grains

arose from Alexander Hamilton's decision to base the new American unit on the average

weight of a selection of worn Spanish dollars (and later Mexican peso). Hamilton got the


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treasury to weigh a sample of Spanish dollars and the average weight came out to be 371

grains. A new Spanish dollar was usually about 377 grains in weight, and so the new U.S.

dollar was at a slight discount in relation to the Spanish dollar. The gold equivalent of the

Spanish dollar in sterling was 1 = $4.80, whereas the gold equivalent of the U.S. dollar

was 1 = 4.86. This exchange rate with sterling remained right up until Britainabandoned the gold standard in 1931.

The Coinage Act of 1792 set the value of an eagle at 10 dollars, and the dollar at 1/10th

eagle. It called for 90% silver alloy coins in denominations of 1, 1/2, 1/4, 1/10, and 1/20

dollars; it called for 90% gold alloy coins in denominations of 1, 1/2, 1/4, and 1/10

eagles.

The value of gold or silver contained in the dollar was then converted into relative value

in the economy for the buying and selling of goods. This allowed the value of things to

remain fairly constant over time, except for the influx and outflux of gold and silver in

the nation's economy.

DOLLAR SIGN

The symbol $, usually written before the numerical amount, is used for the U.S. dollar (as

well as for many other currencies). The sign's ultimate origins are not certain, though it is

possible that it comes from the Pillars of Hercules which flank the Spanish Coat of

arms on the Spanish dollars that were minted in the New World mints in MexicoCity, Potos, Bolivia, and in Lima, Peru. These Pillars of Hercules on the silver Spanish

dollar coins take the form of two vertical bars and a swinging cloth band in the shape of

an "S".

Another explanation is that this symbol for peso was the result of a late 18th-century

evolution of the scribal abbreviation "ps." Thep and thes eventually came to be written

over each other giving rise to $.

COINS

Official United States coins have been produced every year from 1792 to the present.


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Half-cent 1792 - 1857

Penny 1793present

2-cent 18641873

3-cent 1851-1873

Half Dime 1792-1873 (Not to be confused with the Nickel below also worth 5

cents)

Nickel 1866present

Dime 1792present

20-cent 1875-1878

Quarter 1796present

Half dollar 1794present

Dollar coin (United States) 1794present

Quarter Eagle ($2.5 gold coin) 1792-1929

Three-dollar piece 1854-1889

Half Eagle ($5 gold coin) 1795-1929

Eagle ($10 gold coin) 1795-1929

Double Eagle ($20 gold coin) 1850-1933

COLLECTOR COINS

The United States Mint produces Proof Sets specifically for collectors and

speculators. Silver Proofs tend to be the standard designs but with the dime, quarter, half

dollar, and in some cases the dollar having silver content. Another type of proof set is the

Presidential Dollar Proof Set where four special $1 coins are minted each featuring a

president.

2007 had George Washington, John Adams, Thomas Jefferson,

and James Madison

2008 had James Monroe, John Quincy Adams, Andrew Jackson,

and Martin Van Buren

2009 had William Henry Harrison, John Tyler, James K. Polk, and

Zachary Taylor


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2010 has Millard Fillmore, Franklin Pierce, James Buchanan, and

Abraham Lincoln

2011 is to have Andrew Johnson, Ulysses S. Grant, Rutherford B.

Hayes, and James A. Garfield

VALUE

The 5th paragraph of Section 8 of Article 1 of the U.S. Constitution provides that the U.S.

Congress shall have the power to "coin money" and to "regulate the value" of domestic

and foreign coins. Congress exercised those powers when it enacted the Coinage Act of

1792. That Act provided for the minting of the first U.S. dollar and it declared that the

U.S. dollar shall have "the value of a Spanish milled dollar as the same is now current".

The table to the right shows the equivalent amount of goods that, in a particular year,

could be purchased with $1. The table shows that from 1774 through 2009 the U.S. dollar

has lost about 96.4% of its buying power.[43]

Buying power of one U.S. dollar compared to 1774 USD

YearEquivalentbuying power



1774 $1.00 1860 $0.97 1950 $0.33

1780 $0.59 1870 $0.62 1960 $0.26

1790 $0.89 1880 $0.79 1970 $0.20

1800 $0.64 1890 $0.89 1980 $0.10


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1810 $0.66 1900 $0.96 1990 $0.06

1820 $0.69 1910 $0.85 2000 $0.05

1830 $0.88 1920 $0.39 2007 $0.04

1840 $0.94 1930 $0.47 2008 $0.04

1850 $1.03 1940 $0.56 2009 $0.04

INTERNATIONAL USE


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Worldwide use of the U.S. dollar and the euro: United States External adopters ofthe US dollar Currencies pegged to the US dollar Currencies pegged to the US dollarw/ narrow band Euro zone External adopters of the euro Currencies pegged to theeuro Currencies pegged to the euro w/ narrow band Note that the Belarusian ruble ispegged to the Euro, Russian Ruble, and U.S. Dollar in a currency basket.

The dollar is also used as the standard unit of currency in international markets for

commodities such as gold and petroleum (the latter sometimes called petrocurrency is the

source of the term petrodollar). Some non-U.S. companies dealing in globalized markets,

such as Airbus, list their prices in dollars.

The U.S. dollar is the world's foremost reserve currency. In addition to holdings bycentral banks and other institutions, there are many private holdings, which are believed

to be mostly in one-hundred-dollar banknotes (indeed, most American banknotes actually

are held outside the United States). All holdings of U.S.-dollar bank deposits held by

non-residents of the United States are known as "eurodollars" (not to be confused with

the euro), regardless of the location of the bank holding the deposit (which may be inside

or outside the U.S.).

CURRENCY COMPOSITION OF OFFICIAL EXCHANGE

RESERVES

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06


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% 65.2% 69.3% 70.9% 70.5% 70.7% 66.5% 65.8% 65.9% 66.4% 65.7%

17.9% 18.8% 19.8% 24.2% 25.3% 24.9% 24.3% 25.2%

% 2.6% 2.7% 2.9% 2.8% 2.7% 2.9% 2.6% 3.3% 3.6% 4.2%

% 5.8% 6.2% 6.4% 6.3% 5.2% 4.5% 4.1% 3.9% 3.7% 3.2%

% 14.5% 13.8%

% 1.4% 1.6%

% 0.4% 0.3% 0.2% 0.3% 0.3% 0.4% 0.2% 0.2% 0.1% 0.2%

% 10.2% 6.1% 1.6% 1.4% 1.2% 1.4% 1.9% 1.8% 1.9% 1.5%

DOLLAR VS EURO

uro per U.S. dollar 19992010

ear

Highest Lowest

Date Rate Date Ra

99 03 Dec 0.9985 05 Jan 0.

00 26 Oct 1.2118 06 Jan 0.


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01 06 Jul 1.1927 05 Jan 1.

02 28 Jan 1.1658 31 Dec 0.

03 08 Jan 0.9637 31 Dec 0.

04 14 May 0.8473 28 Dec 0.

05 15 Nov 0.8571 03 Jan 0.

06 02 Jan 0.8456 05 Dec 0.

07 12 Jan 0.7756 27 Nov 0.

08 27 Oct 0.8026 15 Jul 0.

09 04 Mar 0.7965 03 Dec 0.

10 08 Jun 0.8374 13 Jan 0.

ource: Euro exchange rates in USD, ECB


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EXCHANGE RATES

A sharp turnaround began in late 2008 with the onset of the global financial crisis. As

investors sought out safe-haven investments in U.S. treasuries and Japanese government

bonds from the financial turmoil, the Japanese yen and United States dollar sharply rose

against other currencies, including the euro.[69] At the same time, however, many

rency units per U.S. dollar, averaged over the year.[73] * = value at start of year.

1970* 1980* 1985* 1990* 1993 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

o - - - 0.83430.8551

0.9387

1.0832

1.1171

1.0578

0.8833

0.8040

0.8033

0.7960

0.7293

0.6791

anesn

357.6 240.45 250.35 146.25111.08

113.73

107.80

121.57

125.22

115.94

108.15

110.11

116.31

117.76

103.39

nding

0.4164

0.4484[74]

0.8613[74] 0.6207

0.6660

0.6184

0.6598

0.6946

0.6656

0.6117

0.5456

0.5493

0.5425

0.4995

0.5392

adiallar

1.081 1.168 1.321 1.16051.2902

1.4858

1.4855

1.5487

1.5704

1.4008

1.3017

1.2115

1.1340

1.0734

1.0660

xicano

- 22.8001 206.9712,679.51

3.1237

9.553 9.459 9.337 9.66310.793

11.290

10.894

10.906

10.928

11.143

minuan

- 1.7050 2.9366 4.78325.7620

8.2783

8.2784

8.2770

8.2771

8.2772

8.2768

8.1936

7.9723

7.6058

6.9477

gapoollar - - 2.179 1.903

1.6158

1.6951

1.7361

1.7930

1.7908

1.7429

1.6902

1.6639

1.5882

1.5065

1.4140

: Last 4 years 2005-2002 2003-2000 1996-1999 1993-1996 1990 1970-1992 1970-1985 Canada, China, Mexico

ican peso values prior to 1993 revaluation.


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countries such as China,[70] India andRussia announced their intentions to diversify their

foreign reserve portfolios away from the U.S. dollar.

The European sovereign debt crisis that unfolded in 2010 sent the euro falling to a four-year low of $1.1877 on June 7, as investors considered the risk thatcertain Eurozone members may default on their government debt. [72] The euro's decline in2008-2010 had erased half of its 2000-2008 rally.

ISO 4217 CODE USDOFFICIAL USERS UNITED STATES ,

ECUADOR,EL SALVADOR,15 US TERRITORIES

UNOFFICIAL USERS 12 OTHER COUNTRIES4 OTHER NON U.S.

TERRITORIESINFLATION 1.15% , AUGUST 2010METHOD CPI

PEGGED BY 23 CURRENCIESSUBUNIT 1/10 DIME, 1/100- CENT, 1/1000-MILL


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UNITED STATES MINOR OUTLYINGISLANDS

The United States Minor Outlying Islands, a statistical designation defined by theInternational Organization for Standardization's ISO 3166-1 code, consists of nine UnitedStates insular areas in the Pacific Ocean and Caribbean Sea: Baker Island, HowlandIsland, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island,Palmyra Atoll, and Wake Island. The Caribbean territories of Bajo Nuevo Bank andSerranilla Bank are also sometimes included by the U.S. government, but its claims aredisputed by other countries.

Among them, Palmyra Atoll is the only incorporated territory. As of 2008, none of theislands has any permanent residents. The only human population consists of temporarily

stationed scientific and military personnel. The 2000 census counted 315 people onJohnston Atoll and 1 person on Wake Island.There has been no modern indigenouspopulation, except at the 1940 census. In 1936 a colonization scheme began to settleAmericans on Baker, Howland, and Jarvis, but all three islands were evacuated in 1942as a result of World War II.

The islands are grouped together as a statistical convenience. They are not administeredcollectively, nor do they share a single cultural or political history beyond beinguninhabited islands under the sovereignty of the United States.

They are collectively represented by the ISO 3166-1 alpha-2 code UM. The individual

islands have ISO 3166-2 numerical codes, see ISO 3166-2:UM. The Internet countrycode top-level domain (ccTLD) ".um" has historically been assigned to the islands;however, the .um ccTLD was retired in January 2007.

The ISO introduced the term "United States Minor Outlying Islands" in 1986. From 1974until 1986, five of the islands (Baker Island, Howland Island, Jarvis Island, Palmyra Atolland Kingman Reef) were grouped under the term United States Miscellaneous PacificIslands, with ISO 3166 code PU. The code of Midway Atoll was MI, the code ofJohnston Atoll was JT, and the code of Wake Island was WK.

UNITED STATES DOLLAR

The United States dollar is the official currency of the United Statesof America. The U.S. dollar is normally abbreviated as the dollarsign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. It isdivided into 100 cents.


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The U.S. dollar is the currency most used in internationaltransactions and is one of the world's reserve currencies. Severalcountries use it as their official currency, in many others it is the defacto currency,and it is also used as the sole currency in some BritishOverseas Territories.

HISTORYThe first dollar coins issued by the United States Mint (founded 1792) weresimilar in size and composition to the Spanish dollar. The Spanish, U.S. silverdollars, and Mexican silver pesos circulated side by side in the United States,and the Spanish dollar and Mexican peso remained legal tender until 1857.

The coinage of various English colonies also circulated. The lion dollar waspopular in the Dutch New Netherland Colony (New York), but the lion dollaralso circulated throughout the English colonies during the 17th century andearly 18th century. Examples circulating in the colonies were usually worn sothat the design was not fully distinguishable, thus they were sometimesreferred to as "dog dollars".

The U.S. dollar was created and defined by the Coinage Act of 1792. Itspecified a "dollar" to be based in the Mexican peso at 1 dollar per peso andbetween 371 and 416 grains (27.0 g) of silver (depending on purity) and an'eagle" to be between 247 and 270 grains (17 g) of gold (again depending onpurity). The choice of the value, 371 grains arose from Alexander Hamilton'sdecision to base the new American unit on the average weight of a selectionof worn Spanish dollars (and later Mexican peso). Hamilton got the treasuryto weigh a sample of Spanish dollars and the average weight came out to be371 grains. A new Spanish dollar was usually about 377 grains in weight, andso the new U.S. dollar was at a slight discount in relation to the Spanish

dollar. The gold equivalent of the Spanish dollar in sterling was 1 = $4.80,whereas the gold equivalent of the U.S. dollar was 1 = 4.86. Thisexchange rate with sterling remained right up until Britain abandonedthe gold standard in 1931.

The Coinage Act of 1792 set the value of an eagle at 10 dollars, and thedollar at 1/10th eagle. It called for 90% silver alloy coins in denominations of1, 1/2, 1/4, 1/10, and 1/20 dollars; it called for 90% gold alloy coins indenominations of 1, 1/2, 1/4, and 1/10 eagles.

The value of gold or silver contained in the dollar was then converted intorelative value in the economy for the buying and selling of goods. Thisallowed the value of things to remain fairly constant over time, except for theinflux and out flux of gold and silver in the nation's economy. The earlycurrency of the USA did not exhibit faces of presidents, as is the custom now.In fact, George Washington was against having his face on the currency, apractice he compared to the policies of European monarchs. The currency aswe know it today did not get the faces they currently have until after theearly 20th century; before that "heads" side of coinage used profile faces and


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striding, seated, and standing figures from Greek and Roman mythology andcomposite native Americans. The last coins to be converted to profiles ofhistoric Americans were the dime (1946) and the Dollar (1971).

CONTINENTAL CURRENCY

In 1775, the United States and the individual states began issuing

"Continental Currency" denominated in Spanish dollars and (for the issues ofthe states) the sd currencies of the states.

The continental currency suffered from printing press inflation and wasreplaced by the silver dollar at the rate of 1 silver dollar = 1000 continentaldollars.

SILVER AND GOLD STANDARDS

From 1792, when the Mint Act was passed, the dollar was pegged to silver at371.25 grains (24.056 g), or 24.75 grains (1.604 g) of gold. Many historianserroneously assume gold was standardized at a fixed rate in parity withsilver; however there is no evidence of Congress making this law. This has to

do with Alexander Hamilton's suggestion to Congress of a fixed 15:1 ratio ofsilver to gold, respectively. The gold coins that were minted however, werenot given any denomination whatsoever and traded for a market valuerelative to the Congressional standard of the silver dollar. 1834 saw a shift inthe gold standard to 23.2 grains (1.50 g), followed by a slight adjustment to23.22 grains (1.505 g) in 1837 (16:1 ratio).

In 1862, paper money was issued without the backing of precious metals, dueto the Civil War. Silver and gold coins continued to be issued and in 1878 the


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link between paper money and coins was reinstated. This disconnection fromgold and silver backing also occurred during the War of 1812. The use ofpaper money not backed by precious metals had also occurred under theArticles of Confederation from 1777 to 1788. With no solid backing and beingeasily counterfeited, the continentals quickly lost their value, giving rise tothe phrase "not worth a continental". This was a primary reason for the "No

state shall... make anything but gold and silver coin a tender in payment ofdebts" clause in article 1, section 10 of the United States Constitution.

Obverse of rare 1934 $500 Federal Reserve Bill, featuring a portrait ofPresident William McKinley.

Reverse of $500 Bill

The Gold Standard Act of 1900 abandoned the bimetallic standard anddefined the dollar as 23.22 grains (1.505 g) of gold, equivalent to setting the


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price of 1 troy ounce of gold at $20.67. Silver coins continued to be issued forcirculation until 1964, when all silver was removed from dimes and quarters,and the half dollar was reduced to 40% silver. Silver half dollars were lastissued for circulation in 1969.

Gold coins were confiscated in 1933 and the gold standard was changed to13.71 grains (0.888 g), equivalent to setting the price of 1 troy ounce of goldat $35. This standard persisted until 1968. Between 1968 and 1975, a varietyof pegs to gold were put in place. The price was at $42.22 per ounce beforeAugust 15, 1971saw the U.S. dollar freely float on currency markets.

According to the Bureau of Engraving and Printing, the largest note it everprinted was the $100,000 Gold Certificate, Series 1934. These notes wereprinted from December 18, 1934 through January 9, 1935, and were issued

by the Treasurer of the United States to Federal Reserve Banks only againstan equal amount of gold bullion held by the Treasury. These notes were usedfor transactions between Federal Reserve Banks and were not circulatedamong the general public.


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UNITED ARAB EMIRATES DIRHAM

The dirham (Arabic: ) (sign: :; code. AED) is the currency of the United ArabEmirates. The ISO 4217 code (currency abbreviation) for the United Arab Emirates

dirham isAED. Unofficial abbreviations include DH or Dhs. The dirham is subdividedinto 100 fils ().

HISTORY

The United Arab Emirates dirham was introduced December 1971. It replaced the Qatarand Dubai riyal at par. The Qatar and Dubai riyal had circulated since 1966 in all of theemirates except Abu Dhabi, where the dirham replaced the Bahraini dinar at 1 dirham =0.1 dinar. Before 1966, all the emirates that were to form the UAE used the Gulf rupee.As in Qatar, the emirates briefly adopted the Saudi riyal during the transition from the

Gulf rupee to the Qatar and Dubai riyal.

On January 28, 1978, the dirham was officially pegged to the IMF's Special DrawingRights (SDRs)[1]. In practice, it is pegged to the U.S. dollar for most of the time[2]. SinceNovember 1997, the dirham has been pegged to the 1 U.S. dollar = 3.6725 dirhams [3],which translates to approximately 1 dirham = 0.272294 dollar.

The name Dirham derives from the Greek word Drachmae, literally meaning "handful",through Latin.[4] Due to centuries of old trade and usage of the currency, dirham survivedthrough the Ottoman regime.

COINS

In 1973, coins were introduced in denominations of 1, 5, 10, 25, 50 fils, and 1 dirham.The 1, 5 and 10 fils are struck in bronze, with the higher denominations in cupro-nickel.The fils coins were same size and composition as the corresponding Qatar and Dubaidirham coins. In 1995, the 50 fils and 1 dirham coins were reduced in size, with the new50 fils being curve-equilateral-heptagonal shaped.


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The value and numbers on the coins are written in Eastern Arabic numerals and the text isin Arabic. The 1, 5 and 10 fils coins are rarely used in everyday life, so all amounts arerounded up or down to the nearest multiples of 25 fils. The 1 fils coin is a rarity and doesnot circulate significantly. In making change there is a risk of confusing the old 50 filscoin for the modern 1 dirham coin because the coins are almost the same size.

Since 1976 the Central Bank of the United Arab Emirates has minted severalcommemorative coins celebrating different events and rulers of the United ArabEmirates. For details, see Commemorative coins of the United Arab Emirates dirham.

ISSUES WITH FRAUD

By August 2006 it became publicly known that the Philippine one peso coin is the samesize as one dirham. As 1 peso is only worth 8 fils, this has led to vending machine fraudin the U.A.E. The Australian ten cent coin is the same size, shape and weight as theU.A.E. Dirham. Pakistan's 5 Rupee coin, Omani 50 Baisa coin and the Moroccan Dirham

is also the same size as U.A.E. one Dirham coin. A falcon watermark is present on alldirham notes in order to prevent fraud.

BANKNOTES

In 1973, the U.A.E. Currency Board introduced notes in denominations of 1, 5, 10, 50,100 and 1000 dirham. A second series of note was introduced in 1982 which omitted the

1 and 1000 dirham notes. 500 dirham notes were introduced in 1983, followed by 200dirham in 1989. 1000 dirham notes were reintroduced in 2000. Banknotes are currentlyavailable in denominations of 5 (brown), 10 (green), 20 (light blue), 50 (purple), 100(pink), 200 (green/brown), 500 (navy blue) and 1000 (greenish blue) dirham.

The obverse texts are written in Arabic with numbers in Eastern Arabic numerals; thereverse texts are in English with numbers in Arabic numerals. The 200 dirhamdenomination is scarce as it was only produced in 1989; any circulating today come frombank stocks. The 200 dirham denomination has since been reissued and is now incirculation since late May 2008 - it has been reissued in a different colour; Yellow/Brownto replace the older Green/Brown.

1982 Series

ImageValue

MainColor

Dimensions(mm)

Description

Obverse Reverse Obverse Reverse

5Dirham

Brown 157 x 67 SharjahCentralSouq alsoknown as

a landscapein theNorthernEmirates


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IslamicSouq, theBlue Souqor the centalmarket(souq

meaningmarket inarabic)

10Dirham

Green 147 x 62

TheKhanjar(Arabic:) is thetraditionaldagger ofOman

a pilot farm

20dirham

Blue 149 x 63

the frontface of theDubaiCreek Golfand YachtClub

Traditional

tradingDhow(calledSama'a)

50dirham

Purple 151 x 64

Oryx (atype ofantelope) ()

pre-Islamicfort in AlAin

100dirham

Pink 155 x 66 Fahidi Fort

DubaiWorldTradeCentrebuildingshown

200dirham

Green /Brown

157 x 67the ZayedSports City

CentralBank of theUAEBuilding

500dirham

Navyblue

159 x 68a falcon'shead

TheJumeirahMosque,one of themost well

knownmosques inthe UAE

1000dirham

Greenish-blue

163 X 70Al HosnPalace

Abu DhabiCorniche


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EXCHANGE RATES


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URUGUAYAN PESO

Uruguayan peso has been a name of the Uruguayan currency since Uruguay's settlementby Europeans. The present currency, thepeso uruguayo (ISO 4217 code: UYU) was

adopted in 1993 and is subdivided into 100 centsimosHISTORY

Uruguay obtained monetary stability in 1896, based on the gold standard. This favorablestate of affairs ended after World War One. An unsettled period followed. Economicdifficulties after World War Two produced inflation, which became serious after 1964and continued into the 1970s.

The peso was replaced in November 1973 by the nuevo peso (new peso; ISO 4217 code:

UYN) at a rate of 1 new peso for 1000 old pesos. The nuevo peso was also subdivided into100 centsimos.

After further inflation, thepeso uruguayo (ISO 4217 code: UYU) replaced the nuevo pesoon March 1, 1993, again at a rate of 1 new for 1000 old.


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Uruguayans became accustomed to the constant devaluation of their currency.Uruguayans refer to periods of real appreciation of the currency as atraso cambiario,which literally means that "the exchange rate is running late". As a consequence of theinstability of the local currency, prices for most big-ticket items (real estate, cars andeven executives' salaries) are denominated in U.S. dollars.

During the military rule, the peso was on a crawling peg to the dollar. A table of thefuture value of the dollar was published daily by the government (called the tablita). In1982, the currency was devalued ("the tablita was broken"), throwing thousands ofcompanies and individuals into bankruptcy. In the 1990s, a new mechanism to providepredictability was introduced, this time in the form of a sliding range, with top andbottom margins, at which the government would intervene. In 2002, after a banking crisisand amid a huge budget deficit, the currency was again allowed to float, losing almost50% of its value in a couple of weeks, and, again, throwing into bankruptcy thousands ofcompanies and individuals who held debts denominated in US dollars.

In 2004 a phenomenon completely new to most Uruguayans developed: the currencyappreciated in nominal terms against the US dollar, going from 30 to 24 pesos to thedollar. By 2008 the peso reached 19 to the US dollar, recovering more than half of its lossduring the crisis. This revaluation brought protests from the industrial sector, which feltthat it lost competitiveness. The government hopes that a floating currency will "de-dollarize" the economy. Uruguay does not seem to have found a mechanism that providesthe exchange rate some level of predictability, while at the same time allowing thecountry to adapt its prices so that its exports remain competitive

COINS

In 1994, stainless-steel 10, 20 and 50 centsimos and brass 1 and 2 pesos uruguayos wereintroduced. 5 and 10 pesos uruguayos were introduced in 2003 and 2000, respectively.Coins in circulation are:

1 peso uruguayo 2 pesos uruguayos 5 pesos uruguayos 10 pesos uruguayos

In July 2010, 50 centsimos coins were withdrawn from circulation

BANKNOTES

In 1995-1996, banknotes in denominations of 5, 10, 20, 50, 100, 200, 500 and 1000 pesosuruguayos were introduced, followed by 2000 pesos uruguayos in 2003. Banknotes incirculation are:


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20 pesos (Juan Zorrilla de San Martn). 50 pesos (Jos Pedro Varela) 100 pesos (Eduardo Fabini) 200 pesos (Pedro Figari) 500 pesos (Alfredo Vzquez Acevedo)

1000 pesos (Juana de Ibarbourou) 2000 pesos (Dmaso Antonio Larraaga)

The 5 peso and 10 peso banknotes have been withdrawn from circulation, given theintroduction of the coins of the same value.


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IFS Currency Assignment

Documents

Transcript of IFS Currency Assignment