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please answer, will thumbs up!! Mini Case: Currency Turmoil in European Monetary System in 1992 The data provided below are the exhibit from the article
please answer, will thumbs up!! Mini Case: Currency Turmoil in European Monetary System in 1992 The data provided below are the exhibit from the article titled, "A Ghastly Game of Dominoes", appeared in the Economist of September 19, 1992. The Exhibit presented macro-economic statistics for all the countries participating in the European monetary system (EMS) [more details about EMS are in the textbook ppl64-166]. To prevent you from guessing, I gave each cy that only provides a vague hint on the actual European country of origin. A - Currency's ERM position as of Sept 15th,1992. A value of -100 means that the currency is at its lower bound and is weak relative to all other currencies in the zone. A value of 100 means that the currency is at its upper bound and is strong relative to all other currencies in the zone. B - Currency's over/under valuation relative to its PPP value (\%) C-Ratio of foreign reserves at the central bank to average monthly imports D - Budget deficit as \% of GDP, 1992 E - Inflation rate %, latest F - GDP growth, \%, 1992 G - Devaluation risk Based on the information provided above, answer the following questions: 1. Which countries have the highest currency risk (devaluation risk)? Please rank them in column G with 1"highest risk. 2. What are the effects of devaluation on companies in those high risk countries (i.e. profit margin, exports, cost of foreign debt, and etc.)
please answer, will thumbs up!!
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