International Fisher Effect and International Maritime Organization: Difference between pages

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This theory predicts that the spot foreign exchange (FX) rate will change over time to reflect and offset differences in interest rates in the respective currencies.  
''Sustainability - climate change - United Nations (UN).''


So for example, unhedged currency depreciation losses will on average negate and match exactly any gains on interest differentials between the two currencies.
(IMO).


The International Maritime agency is the UN agency with responsibility for promoting safe and sustainable shipping.


The International Fisher Effect links Expectations Theory in FX markets with Interest Rate Parity.
This includes the prevention of marine and atmospheric pollution by ships, consistent with the UN's Sustainable Development Goals.


Interest rate parity theory predicts that forward FX rates will reflect interest rate differentials.


Expectations Theory predicts that forward FX rates will be reflected - on average - by outturn spot FX rates for the same maturities.
== See also ==
 
* [[Climate change]]
 
* [[Fossil fuel]]
One way of speculating about this relationship is an FX ''carry trade''.  The trader speculates that the spot exchange rate will ''not'' change by as much as predicted by the International Fisher Effect.
* [[Greenhouse gas]]
 
* [[OPEC]]
Among other things, the International Fisher Effect suggests that it should not be possible to earn consistent profits by entering such FX carry trade speculations.
* [[Peak oil]]
 
* [[Poseidon Principles]]
This is because of no-arbitrage theory, which suggests that it should not be possible to earn consistent speculative profits by speculating against Expectations Theory in any market.
* [[Renewables]]
 
* [[Stewardship]]
 
* [[Sustainability]]
:<span style="color:#4B0082">'''Example: Emerging market currency - carry trade'''</span>
* [[Sustainable Development Goals]]
 
* [[United Nations]]
:A trader borrows a hard currency at an interest rate payable of 1% per annum.
 
:They invest in an emerging market currency to enjoy an interest rate receivable of 10% per annum.
 
:So long as there is no change in the exchange rate between the two currencies, the trader enjoys a gain of (approximately) 10% - 1% = 9% per annum, for as long as the carry trade is open.  Usually measured in days.


:However, the International Fisher Effect predicts that the emerging market currency will weaken against the hard currency.  By an average amount that can be calculated from the interest rate differential.


 
==External link==
== See also ==
*[https://www.imo.org/en/About/Pages/Default.aspx Introduction to the IMO]
* [[Carry trade]]
* [[Depreciation]]
* [[Emerging currency]]
* [[Expectations theory]]
* [[Fisher Effect]]
* [[Foreign currency]]
* [[Forward rate]]
* [[Four way equivalence model]]
* [[Hard currency]]
* [[Interest rate parity]]
* [[No arbitrage conditions]]
* [[Outturn]]
* [[Purchasing power parity]]
* [[Spot rate]]


[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Corporate_finance]]
[[Category:Manage_risks]]
[[Category:Investment]]
[[Category:Cash_management]]
[[Category:Long_term_funding]]
[[Category:Compliance_and_audit]]
[[Category:Ethics]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 16:05, 6 February 2021

Sustainability - climate change - United Nations (UN).

(IMO).

The International Maritime agency is the UN agency with responsibility for promoting safe and sustainable shipping.

This includes the prevention of marine and atmospheric pollution by ships, consistent with the UN's Sustainable Development Goals.


See also


External link

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