The devaluation and revaluation are two useful concepts that are commonly used in financial markets, economy and finance, we have always heard in the financial situation of our country these two terms, but really, we know that means devaluation and revaluation? And as these two concepts directly affect the economic stability of Colombia?
In the first part, the devaluation is to reduce the currency parity, or what is the same, preserve the master currency at a lower parity. Devalue is, therefore, set a higher gold price or currency, in terms of the country's currency devalues, whether it is directly linked to the currency through a currency gold. (Agustin Alejandro, 2009).
The concept is applicable to level devalue deficit in the balance of payments, if you want to remain under the pattern of currency and avoid deflation. In other words, the devaluation acts primarily in the currency, enters function when you have to pay more local currency for foreign currency, will lose competitiveness, worth less against a currency of another country, also known as fall in the value of the coin.
"Revaluation Helps to determine and account for fixed asset at the true and fair market value. When a revaluation is done, the asset's Recorded value (historical cost value in the ledger) will be adjusted to the market value". (NICOLAE BOBIŢAN, 2009). The historical values Recorded in the books are not accurate since the market value of the asset will fluctuate and be higher or lower May over time. A revaluation will be done to Establish The most accurate accounting information Regarding the asset's value.
In conclusion, the revaluation is the time to give less local currency for foreign currency, ie, instead of driving a low price compared to foreign currency, this raises its price.
CASE A (Hypothetical)
1 USD: $ 2000 -------- 1 USD: $ 3000
Case B (Hypothetical)
1 USD: $ 2000 --------- 1 USD: $ 1000
When the exchange rate goes from 2k to 3k per dollar, in a particular situation there are two big winners in the first part, the exporter, since for every dollar sold abroad will not get 2k, otherwise 3k, being thus gain competitiveness and the local price, the other benefit is cheapened, we assume that a tourist who goes to the country in the local currency, its purchasing power increases considerably this reason converges on that now, instead of having to 1 USD currency Local 2k, now with 1 USD will get 3k.
On the contrary, if the revaluation of the case B, where the currency of USD decreases the price of 1k, Two benefited largely the former, an importer, before paying for a good 1 USD worth 2k, while now for every good buy, only pay 1k, on the other hand, the second benefited assume that is a local tourist to travel abroad where the dollar, in that case, for every USD must no longer pay 2k is handled, if not , 1k, being so much more viable for purchasing power, however, in this instance, why one US dollar costs more than a weight?
To solve this question we will go back to the 1940s, a time when the dollar was stronger than other currencies due to a number of post-war treaties such as the Breton Woods (meeting at the World Bank were founded, the International Monetary Fund and countries between industrialized and developing) and the Marshall Plan, an agreement that led to the reconstruction of Europe after the war and consolidated the hegemony of American country on the world, like the split of its currency over the other. Its currency was worth more to rest, because it was backed by the huge gold reserves that had the United States; based on that system it became the dollar in the currency used for all international exchange. (Guiovanni Quijano, 2013), now entering national matter, in Colombia we can consider that the revaluation and devaluation is directly influenced factors under foreign currencies, dollar assumption as the main source of exports. The cost of foreign currencies, especially the dollar, that is their price in pesos, also reflects, to some extent, the phenomena of debasement strengthening of the national currency. (Gilberto Arango, 2004)
David McAlvany explains how how we created the conditions for a global currency war.
Asset Revaluation-Simple Example, by Robert Czernkowsky.
Devaluation and revaluation in Colombia.
A serious financial problem or reality of underdeveloped countries?
One of the most controversial in the financial environment of the country, issues is to note how our currency is falling dramatically against other currencies. If we look at the graph of the Colombian peso against the US dollar, they are right to be concerned, since their Colombian in relation to the US dollar assets are worth 40 percent less than they were worth at the end of 2014. (Manuel Restrepo, 2015)
It is in this instance where the custom to get the most exclusive goods imported logically, we leave aside and remembering, we also have a national industry and we support you, as our purchasing power has been drastically reduced by the currency exchange around our currency.
It is hard to believe that the Colombian peso against the dollar look over $ 3,500 levels and everything exceeded in 2016. For the investor who is desperate to see the depreciation of their assets in local currency and are thinking of investing in dollars, I suggest as my friends should be careful to sell its currency price Colombian located (Manuel Restrepo, 2015)
There are several reasons to believe this: in early December 2015, it finally happened the big event of the year in terms of monetary policy, where the Federal Reserve of the United States decided to raise interest rates after 11 years since we've seen a rise. As a result the fear spread in the markets, since a rise in interest rates implies a less attractive to invest in countries with higher risk than the first power.
This is known as the 'carry trade', which is basically the return that produces an asset as we keep in our possession or the cost of maintaining an asset. Consequently, direct involvement with the phenomenon of rising US interest rates It is an outflow of money from emerging countries, among which includes Colombia, and an input of money to the US, generating increased demand for dollars, and depreciation for the Colombian currency.
Benefits and disadvantages rising dollar.
The likelihood of the US currency today at stable prices a few years ago, when they bought an average of 1880 pesos, are quite remote, even more so with a barrel of oil is selling for under $ 50 and probably will continue to decline dramatically. Of course, neither it could ignore the imminent rate hike by the central bank of the United States (EDF).
Entering financial figures, now talk about the reality of Colombia in 2014, in the following figures we will determine which were the twists and economic activity, in which you can see a clear deficit in the balance of payments.
Balance of payments
Current account (in thousand US $)
Trade balance:
Exports: 56,982.10
Imports: 61,676.14
Balance Trade Balance: 4694.04
Other economic variables.
Services: 6586.30
Rent and Transfer: 8500.15
Current account balance 19,780.49
Capital account:
Direct investment: 12,154.89
portfolio investment and other: 11,794.19
Capital Account Balance: 23,949.08
Reserve assets / RMI / 4436.58
With the above data it can be determined that the country has a deficit in the balance of purchases and sales, ie buys more than it sells, these figures give us a deficit of about 4 billion dollars, which concerned stability Colombian economy over the years. Similarly, other economic variables that interfere in the balance are the services and income or transfer, in these two cases, the two figures are negative, thus being the same previous concept, hired more services we provide. But all is not sad, because the investment figures are encouraging, with a total balance of direct and indirect investments of 23 billion dollars.
Ultimately devaluation is this harmful for the economy?
For negatively affect:
-Importadores
-consumers Of imported products.
-companies And people with debts in dollars.
egresivo -Tourism.
But we also have some benefit:
-Exportadores.
- People who receive remittances from abroad.
-Receptive tourism.
-People With dollar revenues.
For this reason, whether it is beneficial or not is relative, since it would establish a balance between the two factors, in order to verify that change is more significant.
References.
(Guiovanni Quijano, 2013), article “en-que-consiste-la-revaluación-y-devaluación-de-la-moneda” marketingyfinanzas, review, longo edit.
NICOLAE BOBIȚAN, DIANA DUMITRESCU, CARMEN COSTULEAN- 2009- WEST UNIVERSITY OF TIMISOARATHE DIFFERENCES BETWEEN REVALUATION AND ASSETS IMPAIRMENT, main article review, universitary edition.
La devaluación, Jacintos Zapata, Agustín Alejandro, El Cid Editor | apuntes, August 2009- Spanish-Journal
Estructura económica colombiana-Decima edición. 2004, Colombia. Gilberto Arango Londoño MC GRAW HILL Interamericana.
Sleep with their Colombian pesos under the mattress. Manuel Restrepo, 2015, Column dinero.com.Editorial; online columnists.
Made by: Andres Felipe Muñoz Diaz
Code: 10311518309
No hay comentarios.:
Publicar un comentario