We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

South Africa vs Venezuela - Essay Example

In addition to other factors this situation implies that maintaining a fixed exchange rate between both countries will be extremely difficult. In fact, Husted and Melvin (2010) indicate that one of the benefits of adopting a flexible exchange rate is that countries are able to formulate their own monetary policies and the rate of exchange will automatically adjust for differentials in the inflation rates. With an exchange rate peg, as exists in Venezuela, the central bank adjusts supply of foreign exchange in order to maintain the peg with the United States dollar. The graph below shows the changes in the exchange rate between the US$ and the South African Rand and the Venezuelan VER from 2006 to 2010. Figure 1 The information in Figure 1 indicates that the rate of exchange between the US dollar and the Rand ranged from a low of ZAR 6. 49 in 2006 to ZAR 8.42 to US$1 in the case of the South African currency and in the case of the Venezuelan Bolivar from a low of VER 2.147 to a high of VER4.3039. This is because of the differences in the exchange rate policies of the two countries. Although, the exchange rate has been stable for the most part in Venezuela there are obvious instabilities in the macroeconomic policies of the Venezuelan Government. The information in Figure 2 Figure 2 The information in Figure 2 indicates that the inflation rate in Venezuela is high compared to South Africa and this indicates that there is instability and uncertainty in their macroeconomic policies. This instability

Check these samples - they also fit your topic

South Africa
South Africa is a beautiful place blessed not just with the richness of its soils but of its human assets as well. The diverse colors of its inhabitants for one, is a great wealth in itself because of the diversity of culture and ideas, not to mention the individual skills and talents of the people.
2 pages (500 words)Essay
Global South (South Africa)
In a nutshell, it can be said that the paper comprises of in-depth analysis of history, political system, demography and development of South Africa. The paper also focuses upon various conflicts that the country faced over the period of time. It is a thorough examination of conflict and development of the nation.
6 pages (1500 words)Essay
South Africa
This is a phenomenon that had its roots in the early 1650s, a time when white settlers entered the country and started to dominate in the various sectors of economy and governance. However, it is not until 1948 that the apartheid policy became the subject and slogan for the National Party, which vowed to protect the whites from being dominated by the non-whites in all aspects of life.
2 pages (500 words)Essay
Annotated Bibliography for Structure and Strategy
The article outlines and addresses some of the strategies that can be developed in the design of organizations. The article has provided business leaders with information regarding the importance or organizational design and the role it will play towards providing a business with huge competitive advantages over its competitors.
4 pages (1000 words)Essay
South Africa
For the marketing strategy to meet the target group efficiently, they have to consider some of the elements of marketing mix that will dictate whether the strategy is successful or not, these includes; product, promotion, price, and distribution place (Hawkins et al 67).
6 pages (1500 words)Assignment
South Africa
iving us a clear and vivid picture of the very inception of the diamond mines and how people from various parts of the world set up huge mining companies. He takes us back in time to the year 1872, when diamond digging was considered as a settled industry and explains all the
2 pages (500 words)Essay
South africa
The blacks were not alone in the war against the vice that apartheid was because they could receive support from nations abroad and the church councils also played a key role in fighting the vice. Foreign
5 pages (1250 words)Essay
Analyze and explain the development of healthy relationships
We need to put in “time, energy, and care” (Center for Young Women’s Health, 2006) to develop healthy relationships which are based on mutual trust and honesty accompanied with
2 pages (500 words)Essay
Global South (South Africa)
It is a thorough examination of conflict and development of the nation. The term ‘Colonialism’ is referred to a practice of domination that entails the subjugation of one group of people to another. It also refers to political and economic control
6 pages (1500 words)Essay
South Africa
It is also bound to cause a change in distribution of population on such factors as age and gender expectations. South African population is
3 pages (750 words)Essay
South Africa
"Other" population group makes up 0.5% of the total (South Africainfo.com). The population in South Africa is mainly comprised of four broad groups namely: Nguni, Sotho Tswana, Tsonga and
2 pages (500 words)Essay
is a factor as it creates uncertainty in investment by allowing the relative cost of production to rise. There are three types of exchange rate risk that a company is likely to encounter when investing overseas – transaction risk; translation risk and economic risk. Transaction risk is manly related to cash flows from receivables and payables (Papaioannou 2006)). Translation risk is the exchange rate risk that relates to the valuation of the foreign subsidiary for consolidation in the groups balance sheet (Papaioannou 2006)). Economic risk relates to risk associated with domestic revenues and expenses. Identifying the specific risk associated with the investment in Venezuela is crucial in deciding on the strategy to be used to manage the risk. The specific risk associated with this investment in Venezuela is economic risk. Our company can manage this risk by financing operations in the Venezuelan currency –Bolivars, which has a higher cost of inflation than the Rand. Exchange rate adjustments in Venezuela are not in line with purchasing power party (PPP) and so our company’s competitiveness may be eroded as a result of this. It has become a regular practice in oil exporting countries (OECs) for the central bank to intervene in foreign exchange markets in order to manage fluctuations (DaCosta and Olivo 2008). Additionally, there are surrender requirements that may affect our exchange rate risk management strategies. Comparison of the Financial Development In making the decision to invest in a country consideration should be given to its financial development. Al-Yousif (2002) found that financial development and economic growth are mutually causal. That is, financial development leads to economic growth and vice versa. The growth rate of both countries from 2006 to 2013 is illustrated in Figure 3. Figure 3 Source: IMF 2013
Cite this document
  • APA
  • MLA
(“South Africa vs Venezuela Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/104435-south-africa-vs-venezuela
(South Africa Vs Venezuela Essay Example | Topics and Well Written Essays - 750 Words)
“South Africa Vs Venezuela Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.net/finance-accounting/104435-south-africa-vs-venezuela.
  • Cited: 0 times


Name: Course: Instructor: Date: South Africa vs. Venezuela Introduction Foreign direct investment (FDI) requires careful thought before making a decision as changes in the external value of the domestic currency leads to changes in the real value of an investment…
South Africa vs Venezuela
Read TextPreview
Comments (0)
Click to create a comment
Let us find you another Essay on topic South Africa vs Venezuela for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us