Corporations worldwide work daily to increase the value of their stock for the investing public. In order to exploit this value, businesses must constantly make every effort to extensively communicate to their investors and potential investors. In view of this, investor relations are a vital part of business strategy, principally in the area of communication. Corporate departments involved with investor directions must make a necessary connection between efficient communication and company goals. Since communication is starting to play such an important role in investor relations, corporate communication programs are being created not only to participate in financial areas, but also to take part in media relations and other public communication. Ultimately, the best way for corporations to understand communications for investor relations is to look at an overview of the investor relations function, know how to organize investor relations, learn about investor relations programs and be informed on investor relations Continue reading
International Finance
International finance is the branch of economics that studies the dynamics of foreign exchange,foreign direct investment and how these affect international trade. Also studies the international projects, international investment and the international capital flow .International Finance can be broadly defined, as the study of the financial decisions taken by a multinational corporation in the area of international business i.e. global corporate finance. International finance draws much of its background from the preliminary studies in the topics of corporate finance such as capital budgeting, portfolio theory and cost of capital but now viewed in the international dimension.
Understanding the Role and Impact of Green Bonds on the Financial Sector
Socially responsible investment has become an important role of financial services in the world. One of the latest investments that are available in the market is called “green bonds”, its popularity has taken off the recent years. A green bond is a bond specifically earmarked to be used for environmental and climate activities, meaning green bonds are used to fund projects with clear environmental benefits. To elaborate, green bonds are intended to encourage climate-friendly projects that aimed at pollution control, sustainable agriculture and wastewater management system, clean transportation, climate change adaptation, etc. Green bond market is open to different types of issuers such as government bodies, corporates, and financial institutions. The market for green bonds has expanded significantly over the past decade. In 2020, the cumulative green bond issuance crossed over $1 trillion and stood at $1.05 trillion, an average annual growth of 60% since 2015. Last year, the United States led Continue reading
Organization of Foreign Exchange Department
The Foreign Exchange department, which is also being called as the International Banking Division, is one of the important departments of the banks operating in international market. In India also all scheduled commercial banks, both in the nationalized or non-nationalized sectors, do have Foreign Exchange departments, both at their principal offices as well as offices, in metropolitan centers. This department functions independently under the overall change of some senior executive or a senior officer well-versed in foreign exchange operations as well as in the rules and regulations in force from time to time pertaining to foreign exchange transactions advised by various government agencies. The principal function of a Foreign exchange department is to handle foreign inward remittances as well as outward remittances; buying and selling of foreign currencies, handling and forwarding of import and export documents and giving the consultancy services to the exporters and importers. Besides this, the department Continue reading
Euro Notes and Euro Commercial Paper
Euro Notes Euro Notes are like promissory notes issued by companies for obtaining short term funds. They emerged in early 1980s with growing securitization in the international financial market. They are denominated in any currency other than the currency of the country where they are issued. They represent low cost funding route. Documentation facilities are the minimum. They can be easily tailored to suit the requirements of different kinds of borrowers. Investors too prefer them in view of short maturity. When the issuer plans to issue Euro notes, it hires the services of facility agents or the lead arranger. On the advice of the lead arranger, it issues the notes, gets them underwritten and sells them through the placement agents. After the selling period is over the underwriter buys the unsold issues. The Euro notes carry three main cost components: Underwriting fee; One time management fee for structuring, pricing and Continue reading
Types of Selling Rates in Foreign Exchange Markets
When a bank sells foreign exchange it receives Indian rupees from the customer and parts with foreign currency. The sale is affected by issuing a payment instrument on the correspondent bank with which it maintains the nostro account. immediately on sale, the bank buys the requisite foreign exchange from the market and gets its nostro account credited with the amount so that when the payment instrument issued buy its is presented to the corresponded bank it can be honoured by debit to the nostro account. However, depending upon the work involved, viz., whether the sale involves handling of documents by the bank or not, two types of selling rates are quoted in India, they are 1. TT Selling Rate (TT stands for Telegraphic Transfer) This is the rate to be used for all transactions that do not involve handling of documents by the bank. Transactions for which this rate is Continue reading
Various Forms of Exchange Control
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by non-residents. The various forms that exchange control has taken are briefly discussed below: 1. Exchange Pegging This device is usually adopted during war in order to minimize exchange fluctuations. The internal value of a currency may depreciate due to inflation but the government may seek to keep its external value at a higher level than warranted by the purchasing power parity in order to facilitate international transactions. England during First World War and again in the Second World War adopted the method. Between 1916 and 1919, the Sterling was kept artificially pegged at 4.765 dollars — a value which was higher than the real value of the Sterling. This was done by raising loans in America and through these funds, purchasing Continue reading