Materiál na 9.4. 08

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   |        INTRODUCTION                                                                        |
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   Complete the introduction with the appropriate forms of the following verbs and add suitable
   prepositions where necessary: 

                              peg;  fix;  determine; underlie; reflect; engage; adopt  

   The value of a country´s currency is extremely important to all businesses ………………………
   international trade. For over a quarter of a century after the second world war, most major
   currencies ……………………………… the US dollar, which in turn ………………………………… gold. Since the early
   1970s, there has been a system of managed floating exchange rate, largely ………………………… supply
   and demand, which in theory ………………… a country´s balance of payments and rate of inflation. In
   fact, many currency movements seem to be influenced by speculation rather than ……………………
   economic activity. Currency speculation in Western Europe was greatly reduced when a common
   currency, the euro, …………………………………… twelve countries in 2002.

                                                                           (Source: English for
   Business Studies, Teacher´s Book, p. 122)

   

        E x c h a n g e  r a t e s – Reading p. 140-142/1b

   

   I. The period of gold convertibility

   

   Complete the sentences with the appropriate forms of the following verbs and add suitable
   prepositions where necessary:

                          exchange; define; adjust; abandon; peg; fix; establish

   The Bretton Wood agreement of 1944 ………………………… fixed exchange rates, ……………………… in terms of gold
   and the US dollar. From then to 1971, many currencies …………………………………… the US dollar, i.e. that
   their parities …………………… . During this period, a US dollar was a promissory note which on
   request had to ……………………………… 1/35th of an ounce of gold. Under this system, overvalued or
   undervalued currencies could only …………………………… with the agreement of the International Monetary
   Fund. Such adjustments are called devaluations and revaluations. The Bretton Wood system
   …………………… in 1971 when following inflation, the Fed did not have enough gold to guarantee the
   American currency.

   

   II. Floating exchange rates

   Complete the sentences with the appropriate forms of the following verbs:

              reflect; determine; replace; follow; be; underestimate; establish

   Gold convertibility ……………………………… a system of floating exchange rates which ………………………… purely
   by supply and demand. Milton Friedman, one of the proponents of the latter, argued that
   currencies would automatically …………………… stable exchange rates which would ……………… economic
   realities more precisely than calculations by central bank officials. Yet they ……………………… the
   impact of speculation, and the fact that many companies and investors frequently ………………
   short-term money market trends even if these ……………… contrary to their own long-term interest. 

   

   III. The abolition of exchange controls

   Complete the sentences with the appropriate translations of the following words or phrases:

               deregulovat; zrušit; nemít vztah k/netýkat se; čistě spekulativní;       

                       (pro)následovat; snažit se maximalizovat; rozpětí/marže

   In the late 1970s and early 1980s, the American, British and other governments ……………………… their
   financial systems and …………………… all exchange controls. This has led to the current situation in
   which 95% of the world´s currency transactions …………………………………… transactions in goods but are
   …………………………… . Enormous amounts of money move around the world, …………………………… high interest rates
   or capital gains as investors ………………………………………… the value of their assets. Banks, of course,
   make a profit from ……………………………… between a currency´s buying and selling prices.

   

   IV. Intervention and managed floating exchange rates

   Complete the sentences with the appropriate translations of the following words or phrases and
   add suitable prepositions where necessary:

   1. několik málo (count) ; nechat úrokové míry zcela na milost či nemilost

   Managed (or dirty) floating exchange rates are more common than freely floating ones as
   ………………… governments ……………………………………………………………………… market forces.

   2. vychýlit se/odchýlit se o; zasahovat do/intervenovat v

   In the European Monetary System (EMS) there was an Echange Rate Mechanism (ERM): if the rate
   …………………………… more than plus or minus 2.25% from the central parity, central banks had to
   ………………………………… exchange markets to increase or decrease the value of their currency.

   

   V.The power of speculators and the collapse of the EMS

   From each pair of words printed in bold choose the correct one:

   For weeks in 1992 all the world´s financial institutions and rich individuals had been selling
   pounds as everybody except/included the British Government believed that the pound had been
   undervalued/overvalued since it belatedly joined the ERM in 1990. When the British central
   bank ran out of/build up reserves and could no longer buy pounds, the currency was withdrawn
   from/introduced in the ERM and prevented from floating/allowed to float, instantly losing
   about 15% of its value against the D-mark. The next year/ Next year, speculators attacked five
   other European currencies and the EMS was restored/suspended. It was later
   undermined/reintroduced in a looser form.

   

   VI. Why many business people would prefer a single currency

   Complete the gaps with suitable prepositions:

   Although it is possible 1) ……… some extent to hedge 2) ………… currency fluctuations 3) ………… way
   4) ……… futures contracts, forward planning is difficult when the price can rise or fall 5) ………
   50% in only a few months. (Since exchange controls were abolished, curriences including the
   US$ and the -L- sterling have 6) ……… turn apreciated 7) ……  ……… …… 100% and then depreciated
   8) ……… more than 50% 9) …………… the currencies 10) ………… major trading partners.)

   

   

   T r a n s l a t e: ♫♫ p. 144/2b

   

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   |v zásadě                                      |                                             |
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   |to je trochu moc                              |                                             |
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   |zaujmout pragmatický přístup                  |                                             |
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   |je to sporné/pochybné                         |                                             |
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   |zmírnit šok                                   |                                             |
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   |předvídaná nestálost v úrokových mírách       |                                             |
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   |je na tom něco poučného                       |                                             |
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   |naučit se nereagovat přehnaně                 |                                             |
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   |druhá nejlepší možnost                        |                                             |
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