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10-05-2017, 09:37 PM

Hello ,

Please i need your assistance , i have a research topic - FLEXIBLE FOREIGN EXCHANGE RATES AND BANKING OPERATIONS. Studying for my MBA and i seriously need assistance.Please advise.

10-05-2017, 09:42 PM

(10-05-2017, 09:37 PM)Guest Wrote: Hello ,

Please i need your assistance , i have a research topic - FLEXIBLE FOREIGN EXCHANGE RATES AND BANKING OPERATIONS. Studying for my MBA and i seriously need assistance.Please advise

please, how do i get reply

jaseela123d · 15-05-2017, 09:40 AM

Currency exchange is the means of payment for the international transaction. It consists of convertible currencies which are generally accepted for the settlement of international trade and other external obligations. Like any other commodity, it establishes a market that works more like any other market that has a supply curve, a demand curve and a price and an equilibrium quantity. There are also conditions that remain constant (creteris paribus). When these conditions change, the curve changes and there is a change in the amount of equilibrium price. This market for currencies is known as the forex market.

The foreign exchange market according to the central bank of Nigeria is the medium of interaction between sellers and buyers of foreign exchange an offer to negotiate a mutually acceptable price for the settlement of international transactions. Foreign sellers make up the offer while buyers of foreign exchange constitute their demand. The supply of foreign exchange is derived from oil exports, non-oil exports, foreign tourist spending in Nigeria, repatriation of capital by Nigerians living abroad, etc.
On the other hand, the demand for foreign exchange consists of payments for imports, fiancial commitments with international organizations, external debt service obligations, etc.
Prior to 1958, when the central bank and the enactment of the exchange control law of 1962 were established, foreign exchange was won by the private sector and held in foreign balances by commercial banks acting as agents of local exporters. Another feature of this period was that agricultural exports accounted for the lion's share of foreign exchange earnings. The fact that the British pound sterling was on par with the Nigerian sterling with easy convertibility delayed the establishment of an active currency market.

However, in 1958, when the central bank was established and the subsequent centralization of the foreign exchange authority. In banks, the need for a local currency market is critical. Other factors that led to the evolution of the foreign exchange market in Nigeria include:
The changing pattern of institutional changes in international trade in the economy. Structural change in production, etc.
In the early 1970s, the official exchange receipt was improved following the sharp rise in prices and demand for crude oil exports, which now shifted agricultural exports. The foreign exchange market experienced a boom during this period and became a necessity for the management of foreign exchange resources. However, it was not until 1982 that extensive exchange controls were applied.

The exchange control system failed to develop an appropriate mechanism for allocating foreign exchange. This led to the development of a dual exchange rate system, comprising the first and second level foreign exchange market, adopted in September 1986. The first level was managed while the second tier was subject to market forces. Not only has there been a metamorphosis of the institutional framework from the second level foreign exchange market (SFEM) to the foreign exchange market (FEM), the interbank foreign exchange market (IFEM), the foreign exchange market (AFEM), etc. Frequent changes in operational guidelines and procedures. A number of methods of pricing, marginal and weighted exchange rate determinations and the Dutch auction system (DAS) have also been adopted, among others.

All those aimed at ensuring a more efficient allocation and use of scarce foreign exchange resources, improving the flow of capital to the country, stimulating domestic industrial production, promoting exports, increasing government revenues, helping to restructure our external debt in More profitable terms, etc. .
When there are fluctuations in exchange rates, they often affect various economic activities, such as purchasing power, balance of payments, prices of goods and services, structure of imports, export earnings, External reservations, among others. This prevailing instability in exchange rates and its effects on various economic variables will be the areas of concentration of research work.

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