Posts Tagged ‘Currency’

Currency Swing Gives the French Alps the Edge over Switzerland with Foreign Buyers in 2015













London, UK (PRWEB) January 24, 2015

Volatile currency markets have also caused the price of homes in French or Swiss ski resorts to swing heavily up or down for other nationalities. For Russians, rouble’s devaluation against the euro since January 2014 has pushed up the price of a French ski pad by more than 60 per cent. Meanwhile, Americans have seen their buying power in France surge, thanks to the dollar gaining around 15 per cent against the euro in the past 12 months.

By contrast, in January the cost of a home in Switzerland soared overnight for any foreigner not purchasing with Swiss francs, when the currency was unpegged against the euro and its value escalated against all major currencies. The euro weakened further this week when the European Central Bank announced the introduction of quantitative easing.

“The arrival of QE in the Eurozone combined with the Swiss Central Bank’s decision to unfix its currency against the euro could change the dynamics of the European ski property market in Europe this year,” said Julian Walker, director at Skiingproperty.com. “France, a truly international market, immediately becomes more attractive to foreign buyers – and it’s not only property that has become more expensive in Switzerland, but so have all the associated costs of ownership, including mortgage repayments. There could also be repercussions for the rentals market.”

“The number of Swiss popping over border to purchase in the French Alps should also increase this year, given the injection to their buying power. Buyers should note that there could be further falls in the euro, with the European Central Bank hinting at introducing quantitative easing for the single currency zone this month.”

Ski homes for sale through Skiingproperty.com include apartments at a new development in the centre of Meribel, a resort in the Three Valleys ski area that is especially popular with British people. Prices there for a luxury two-bedroom apartment, bought as a classic freehold, start from €750,000. Today’s (20th January) exchange rate gives this a Sterling value of around £572,000, while a year ago it would have been £620,000 – a difference of nearly £50,000. For a Swiss buyer, the apartment in Swiss francs has fallen to around CHF757,500 from CHF925,000 and for an American buyer to around $ 869,000 from around $ 1,017,000.

Skiingproperty.com has a selection of properties in the French Alps, including apartments from less than €200,000 to €12million chalets.

For further information or to enquire about:

Julian Walker

SkiingProperty.com

Tel: +44 20 8150 9502

Email: info(at)skiingproperty(dot)com

Website: http://www.skiingproperty.com

About Skiingproperty.com

Skiingproperty.com, which is owned and operated by international property specialist Spot Blue International Property, works with developers in the French and Swiss Alps to promote new and off-plan developments to the UK and wider international market. Since its foundation in 2003, Spot Blue International Property has established itself as a leading international property specialist and is a member of the AIPP and NAEA. The company’s high profile in the UK and worldwide means it is regularly quoted in the national press and invited to appear on panels at leading seminars and exhibitions.











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Article by Nelly Naneva
























After the collapse of Bretton Woods system in the early 1970s, the exchange rates of major currencies became floating, thus leaving the supply and demand to adjust foreign exchange rates in accordance to their perceived values. The increase in volatility of the exchange rates, together with the increase in the volume of world trade led to the escalation of foreign-exchange risk.

Currency risk is part of the operational and financial risk associated with the risks of adverse movements in the exchange rate of one particular currency against another. In comparison with investments in local assets, the freely fluctuating currency rates represent an additional risk factor for investors who want to diversify their portfolios internationally. Therefore, the control and management of the currency exchange rate risk is an integral part of business management with a view to improve the effectiveness of international investments.

One effective and generally accepted method for this type of risk management is the use of derivative financial instruments (derivatives) such as futures, forwards, options and swaps. Although derivatives are extremely diverse, by their legal nature all of them constitute a contract between the buyer and seller, concluded in present, while the performance will take place at some time in the future. The value of the derivative contract depends on the price movement of the base or “underlying” security.

1. Using Derivatives for Elimination of Uncertainty (Hedging)

Derivative financial instruments are widely used tools for management and protection against various types of risk and are an integral part of numerous innovative investment strategies. They make future risks negotiable, which leads to the removal of uncertainty through the exchange of market risks, known as hedging. Corporations and financial institutions, for example, are using derivatives to protect themselves against changes in the prices of raw materials, forex exchange rates, stocks, interest rates, etc. They serve as insurance against adverse movements in prices and as a reduction of price fluctuations, which in turn leads to more reliable forecasts, lower capital requirements and higher capital efficiency. These advantages are led to the extensive use of derivative financial instruments: according to ISDA over 94% of the largest companies in USA and Europe manage their risk exposures, through the usage of derivatives. In summary – an investor that has decided to hedge the risk will become a party to a derivative contract, which leads to the financial result, the exact opposite of the financial result generated by the risk. That is, when the value of the hedged asset falls, then the value of the derivative security must increase and vice versa.

2. Using Derivatives for Providing Protection with Minimal Initial Investment

In addition, derivatives provide protection against currency risks with minimal initial investment and consumption of capital at the exceptionally high adaptability of the contractual terms and conditions in relation to the specific needs of each contracting party. They also enable investors to trade future price expectations buying or selling derivative asset instead of the base security at a very low cost in comparison with the direct investment in the underlying asset. The total value of the transaction for the purchase of a derivative on the major currencies is about 80 per cent lower than that of the purchase of a portfolio of relevant basic currencies. If compared with the costs of exposure in less liquid assets such as real estate, the difference in costs between derivative and direct investment in the underlying asset is even significantly higher.

3. Using Derivatives as an Investment

Another way to use derivatives is as an investment. Derivatives are an alternative to investing directly in assets without purchasing the base security. They also allow investments in securities, which cannot be purchased directly. Examples include credit derivatives, which provide payment if the creditor cannot fulfill its bond obligations.

4. Using Derivatives for Speculative Purposes

Although most participants in the market are using derivatives to hedge risks, some of them frequently trade derivatives for the purpose of generating profit at favorable price movements and without any offset positions. Usually, investors open positions in derivative contracts to sell an asset, which in their opinion is overestimated in predetermined period or date in the future. This trading strategy is profitable if the value of underlying assets actually falls. Such trading strategies are extremely important for the efficient functioning of financial markets, thus reducing the risk of a significant understatement or overstatement of the underlying assets.The use of derivatives for risk management is nowadays widespread in developed economies and is considered to be a routine part of the business of financial institutions and companies. The derivative financial instruments serve mainly as insurance against adverse movements in prices and as a tool for reducing price fluctuations, which in turn leads to more reliable forecasts, lower capital requirements and higher productivity.

Furthermore the derivatives provide protection against currency exchange risk with minimal initial investment and consumption of capital at exceptionally high adaptability of the contractual terms and conditions meeting the requirements and needs of investors. They also enable market participants to trade future price expectations, this way purchasing a derivative financial asset instead of the base security at a very low cost in comparison with the total transaction if investing directly in the underlying asset.

About the Author

Nelly Naneva works as CEO of the Financial Institution Freetrade JSC, Sofia, Bulgaria and as Editor of the Online Financial Magazine Markets Weekly http://marketseekly.net.She holds Masters’ Degrees in Law from Sofia University St. Kliment Ohridski, Bulgaria and in Banking and FInance from Institute of Financial Services, School of Finance, London, Great Britain.












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Find More Derivatives Articles

Article by Nelly Naneva









After the collapse of Bretton Woods system in the early 1970s, the exchange rates of major currencies became floating, thus leaving the supply and demand to adjust foreign exchange rates in accordance to their perceived values. The increase in volatility of the exchange rates, together with the increase in the volume of world trade led to the escalation of foreign-exchange risk.

Currency risk is part of the operational and financial risk associated with the risks of adverse movements in the exchange rate of one particular currency against another. In comparison with investments in local assets, the freely fluctuating currency rates represent an additional risk factor for investors who want to diversify their portfolios internationally. Therefore, the control and management of the currency exchange rate risk is an integral part of business management with a view to improve the effectiveness of international investments.

One effective and generally accepted method for this type of risk management is the use of derivative financial instruments (derivatives) such as futures, forwards, options and swaps. Although derivatives are extremely diverse, by their legal nature all of them constitute a contract between the buyer and seller, concluded in present, while the performance will take place at some time in the future. The value of the derivative contract depends on the price movement of the base or “underlying” security.

1. Using Derivatives for Elimination of Uncertainty (Hedging)

Derivative financial instruments are widely used tools for management and protection against various types of risk and are an integral part of numerous innovative investment strategies. They make future risks negotiable, which leads to the removal of uncertainty through the exchange of market risks, known as hedging. Corporations and financial institutions, for example, are using derivatives to protect themselves against changes in the prices of raw materials, forex exchange rates, stocks, interest rates, etc. They serve as insurance against adverse movements in prices and as a reduction of price fluctuations, which in turn leads to more reliable forecasts, lower capital requirements and higher capital efficiency. These advantages are led to the extensive use of derivative financial instruments: according to ISDA over 94% of the largest companies in USA and Europe manage their risk exposures, through the usage of derivatives.

In summary – an investor that has decided to hedge the risk will become a party to a derivative contract, which leads to the financial result, the exact opposite of the financial result generated by the risk. That is, when the value of the hedged asset falls, then the value of the derivative security must increase and vice versa.

2. Using Derivatives for Providing Protection with Minimal Initial Investment

In addition, derivatives provide protection against currency risks with minimal initial investment and consumption of capital at the exceptionally high adaptability of the contractual terms and conditions in relation to the specific needs of each contracting party. They also enable investors to trade future price expectations buying or selling derivative asset instead of the base security at a very low cost in comparison with the direct investment in the underlying asset. The total value of the transaction for the purchase of a derivative on the major currencies is about 80 per cent lower than that of the purchase of a portfolio of relevant basic currencies. If compared with the costs of exposure in less liquid assets such as real estate, the difference in costs between derivative and direct investment in the underlying asset is even significantly higher.

3. Using Derivatives as an Investment

Another way to use derivatives is as an investment. Derivatives are an alternative to investing directly in assets without purchasing the base security. They also allow investments in securities, which cannot be purchased directly. Examples include credit derivatives, which provide payment if the creditor cannot fulfill its bond obligations.

4. Using Derivatives for Speculative Purposes

Although most participants in the market are using derivatives to hedge risks, some of them frequently trade derivatives for the purpose of generating profit at favorable price movements and without any offset positions. Usually, investors open positions in derivative contracts to sell an asset, which in their opinion is overestimated in predetermined period or date in the future. This trading strategy is profitable if the value of underlying assets actually falls. Such trading strategies are extremely important for the efficient functioning of financial markets, thus reducing the risk of a significant understatement or overstatement of the underlying assets.

The use of derivatives for risk management is nowadays widespread in developed economies and is considered to be a routine part of the business of financial institutions and companies. The derivative financial instruments serve mainly as insurance against adverse movements in prices and as a tool for reducing price fluctuations, which in turn leads to more reliable forecasts, lower capital requirements and higher productivity.

Furthermore the derivatives provide protection against currency exchange risk with minimal initial investment and consumption of capital at exceptionally high adaptability of the contractual terms and conditions meeting the requirements and needs of investors. They also enable market participants to trade future price expectations, this way purchasing a derivative financial asset instead of the base security at a very low cost in comparison with the total transaction if investing directly in the underlying asset.



About the Author

Nelly Naneva works as CEO of the Financial Institution Freetrade JSC, Sofia, Bulgaria and as Editor of the Online Financial Magazine Markets Weekly http://marketseekly.net.She holds Masters’ Degrees in Law from Sofia University St. Kliment Ohridski, Bulgaria and in Banking and FInance from Institute of Financial Services, School of Finance, London, Great Britain.










Offshore Currency Risk










(PRWEB) July 7, 2005

International commerce has rapidly elevated as the web has provided a new and far more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant adjustments in the international economic and political landscape have led to uncertainty concerning the direction of foreign exchange rates. This uncertainty leads to volatility and the require for an powerful automobile to hedge foreign exchange rate risk and/or interest rate adjustments while, at the exact same time, effectively ensuring a future monetary position.

Each and every entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this internet site can not possibly cover each and every existing foreign exchange hedging circumstance. As a result, we will cover the much more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.

Foreign Exchange Rate Risk Exposure – Foreign exchange rate risk exposure is frequent to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can instantly expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed proper at the time the quote is given, the foreign exchange rate quote may not necessarily be proper at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Interest Rate Risk Exposure – Interest rate exposure refers to the interest rate differential between the two countries’ currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the “carry” expense paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may possibly sell when the carry price he or she can collect is at a premium to the actual carry expense of the contract sold. Conversely, an arbitrager might acquire when the carry expense he or she might pay is much less than the actual carry price of the contract purchased. Either way, the arbitrager is seeking to profit from a tiny price discrepancy due to interest rate differentials.

Foreign Investment / Stock Exposure – Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a bigger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a certain amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. Very first, the stock cost might go either up or down and the investor is exposed to the speculative stock cost risk. Second, the investor is exposed to foreign exchange rate risk due to the fact the foreign exchange rate might either appreciate or depreciate from the time the investor first bought the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). For that reason, even if a speculative profit is achieved simply because the foreign stock price rose, the investor could truly net lose cash if devaluation of the foreign currency occurred although the investor was holding the foreign stock (and the devaluation quantity was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Hedging Speculative Positions – Foreign currency traders utilize foreign exchange hedging to shield open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged through a number of foreign exchange hedging vehicles that can be used either alone or in mixture to generate entirely new foreign exchange hedging strategies.

John Nobile – Senior Account Executive

CFOS/FX – Online Forex Spot and Options Brokerage

Post Source: http://EzineArticles.com/

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Vocus©Copyright 1997-

, Vocus PRW Holdings, LLC.
Vocus, PRWeb, and Publicity Wire are trademarks or registered trademarks of Vocus, Inc. or Vocus PRW Holdings, LLC.