ASGN1 FIN406 International Finance

College of Administrative and Financial Sciences

Assignment-1

Deadline: 7/10/2022 @ 23:59

     For Instructor’s Use only

Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
• Students must mention question number clearly in their answer.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) No pictures containing text will be accepted and will be considered plagiarism).
• Submissions without this cover page will NOT be accepted.

Questions

Question 1 (5 points): Saudi Arabia has a fixed exchange rate regime; how does this regime affect Saudi’s economy? Its monetary policy and freedom of capital? Explain how would the Saudi Central Bank deal with business cycle (recession, high inflation, or a combination like what we are experienced right now) and whether floating exchange rate regime would be a better choice?

Question 2 (5 points): There was an agreement on 1944 between forty-four countries (Bretton Woods agreement) to fix all currencies with the USD and the USD to gold as a result of fluctuation on many of the major currencies after World War 2.  Later on, the US president Nixon declared banding gold standard on 1971 and let the USD and other currencies to fluctuate with each other.  Would you consider this policy declared by president Nixon as a good one? What is the effect of this policy on the MNE up until now (especially with today’s global recession)?