CURRENCY

Heru Purwantoro Muliawati Sita Putri W

Medium of exchange Or monetary system

Currency

Money

a system of payment tools in general use, accepted in particular country

Eurocurrency

Cash

currency forms: Fiat money. It is the modern currency has value only by government order. The government declare the fiat

currency to be legal. This form of currency has its own

area of circulation The other part of a nation's money supply consists of: bank deposits (sometimes called deposit money) ownership (cheques, debit cards, or other forms of

money transfer)
Deposit money and currency are money in the sense that both are acceptable as a means of payment.

The history of Currency

Paper money The advantages The disadvantages

Coinage era Metals (silver, gold, copper, or silver-gold)

Early currency occurred by 2000 BC. metals were used to represent stored value

Kinds Of Currency System

Floating Exchange Currency determined by free market The countries that used this system: Australia, Brazil, Economic and Monetary of the European Union

Fixed Exchange System

based upon the governments view of the value of its currency the country that used this system is Republic of China

The Regulator of Currency

In cases where a country does have control of its own currency, that control is exercised either by a central bank or by a Ministry of Finance. In Indonesia, Bank Indonesia takes a place as the regulator, and the function are: 1. has the authority to carry out foreign currency intervention 2. guidelines and regulations 3. Set interest rates 4. Fighting for inflation

Currency Fluctuation
Exchange rate Supply and Demand Transaction demand of money Interest rate State of the economy Shock and speculation Political issue

FOREX
(Foreign Exchange Market)
The Foreign Exchange Market is the financial market in which currencies are bought and sold that is a transaction is entered into where a given amount of currency is exchanged for another amount of currency. The roles of the FOREX are: 1.to facilitate International trade where currencies were required to be settled from the country of both the importer and the exporter 2. determines the relative values of different currencies 3. assists international trade and investment by enabling currency conversion.

Major FOREX in the world:

U.S. Dollar ($), European Currency Unit (), Japanese Yen (), British Pound Sterling (), Swiss Franc (Sf), Canadian Dollar (Can$),

Dollar and World Currency

Based on journal entitled Vehicle Currency use in International trade(January, 2005) analysis of this data reveals patterns in the use of the dollar as a vehicle currency in international transactions. The data show the dollar use as a currency in country trade with non-U.S counterparties is tightly because the prevalence of the dollar as a worldwide vehicle currency may be tied to the share of homogeneous goods in world trade and to the share of the U.S. as a direct counterparty in international trade. The euro has replaced the legacy currencies in euro-area transactions and has displaced the dollar mainly in some transactions of European Union accession countries (ECB 2003). The dollar remains an important invoicing currency in transactions involving Asian countries, Australia, and the United Kingdom, among others.

In Indonesia, based on KEPUTUSAN MENTERI KEUANGAN REPUBLIK INDONESIA NOMOR: 155/KM.1/2012 TENTANG NILAI KURS SEBAGAI DASAR PELUNASAN BEA MASUK, PAJAK PERTAMBAHAN NILAI BARANG DAN JASA ATAS BARANG MEWAH, PAJAK EKSPOR, DAN PAJAK PENGHASILAN YANG BERLAKU UNTUK TANGGAL 20 FEBRUARI 2012 SAMPAI DENGAN 26 FEBRUARI 2012 stated in point two
Pasal 2 Dalam hal kurs valuta asing lainnya tidak tercantum dalam Pasal 1, maka nilai kurs yang digunakan sebagai dasar pelunasan adalah kurs spot harian valuta asing yang bersangkutan di pasar internasional terhadap dolar Amerika Serikat yang berlaku pada penutupan hari kerja sebelumnya dan dikalikan kurs rupiah terhadap dolar Amerika Serikat sebagaimana ditetapkan dalam Keputusan Menteri Keuangan ini.

In which currency should exporters set the price of their goods?

When selling to a foreign market, an exporting firm has three options. It can invoice the transaction in its own currency (producers currency pricing, PCP), in the currency of the destination country (local currency pricing, LCP), in a third currency (vehicle currency pricing, VCP), or in a combination of these.

EXCHANGE RATE
. An exchange rate refers to the ratio at which the unit of currency of one country may be, or is, exchanged for the unit of currency of another country. It is the price of one countrys currency expressed in terms of another countrys currency. The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell the currency.

currency has a code by which it is identified. Each code consists of three letters: the first two letters identify the country the 3rd letter is the first letter of the name of the currency. For example: Indonesia =ID, rupiah = R => IDR United States of America = US, dollar = D => USD An exchange rate is a two-way interpretation that is the price of currency A (for example USD) in terms of currency B (for example rupiah/ IDR). For example, an exchange rate of USD1 = IDR9091 can be interpreted that it will cost you IDR9091 to buy 1 USD, or alternatively, for 1 USD you will receive IDR9091

Because foreign exchange transactions involve the exchange of one currency for another, the exchange rate itself is determined by the conditions surrounding demand and supply for the relevant currencies. The following factors influence exchange rate fluctuations: Balance of Payments (BOP) Interest Rates Political developments Government policy Speculation Market sentiment

The participants of the Foreign Exchange Market are: Companies that export and import Foreign investor and commercial Banks Speculators who wish to engage in market activity Money brokers Corporations Traders

REFERENCES
Vehicle Currency Use in International Trade. Linda S. Goldberg and Cdric Tille. Staff Report no. 200. January 2005 International Trade and Currency Exchange.Hlne Rey and Princeton University and CEPR. May 1999 Foreign Exchange Market Journal by The Standard Bank of South Africa Limited 2009 "CURRENCY MANIPULATION" AND WORLD TRADE. Robert W. Staiger and Alan O. Sykes. National Bureau of Economic Research. 1050 Massachusetts Avenue. December 2008 www.google.com