• Liquidity risks
  • Iqtisodiyotni raqamlashtirish sharoitida buxgalteriya hisobi, iqtisodiy tahlil va auditni xalqaro standartlar asosida rivojlantirish muammolari va istiqbollari




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    QarMII konf 26-27 may 2023 (1)

    Transaction risk.
    These are losses that are likely to occur when dealing in 
    different currency. Like the ones international food chains like Dominos and KFC 
    face where they sell locally but report in US dollars. 
    Economic risk
    . This refers to risk associated with different political policies, 
    varied regulations and general state of the economy in the country where business is 
    being conducted. Currency risk can be upwards or downwards. Let’s say you are 
    running a KFC outlet out of India where 1 US dollar fetches 70 Indian Rupees. The 
    outlet retails ₹14,000,000 of products every month which translates to $200,000 in 
    monthly revenue from that New Delhi outlet.Due to worsening domestic 
    macroeconomic variables and rise in crude oil prices, the INR/USD exchange rate has 
    moved from ₹70 per dollar to ₹73 per dollar. Unless the local KFC pushes up the 
    price of the products, it will continue to sell ₹14,000,000 of products for the month. 
    When converted to US dollars, the local sales will now fetch $191,780 to the US 
    multinational corporation. That’s a loss of 4.1% due to currency devaluation. 
    However, had the rupee become stronger against the dollar, the local KFC outlet 
    would have increased the dollar-denominated revenue for the multinational. 
    Liquidity risks
    are financial risks that a given asset cannot be traded quickly 
    enough to prevent a loss or expected profit. Liquidity risk is a type of risk that 
    investors face when investing in assets that cannot be easily sold or converted into 
    cash without incurring significant losses. This risk arises when there is a shortage of 
    buyers for a particular asset or when the market for that asset is illiquid. Investors 
    who hold assets with high liquidity risk may find it difficult to sell their holdings 
    quickly, particularly during times of market stress or economic uncertainty. This can 
    result in losses or missed opportunities for investors who need to raise cash quickly 
    or who want to take advantage of other investment opportunities. To manage liquidity 
    risk, investors may diversify their portfolios across different asset classes and 
    investment vehicles, including cash and cash equivalents, highly liquid securities, and 
    alternative investments such as private equity or real estate. They may also use 


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    hedging strategies to protect against sudden market downturns or other unexpected 
    events. 
    Investors can also assess the liquidity risk of individual investments by 
    analyzing factors such as trading volume, bid-ask spreads, and the availability of 
    buyers and sellers. By understanding the liquidity risk associated with different 
    investments, investors can make more informed decisions about their portfolios and 
    minimize their exposure to this type of risk. 
    In order to attract foreign investors, it is important for host countries to manage 
    these risks effectively. One way to do this is by providing investors with accurate and 
    transparent information about the investment climate and regulatory environment. 
    Host countries should also implement policies that promote stability and 
    predictability in the investment environment. This can include measures such as 
    stable tax policies, clear property rights laws, and effective dispute resolution 
    mechanisms. 
    High levels of external government debt can make a country appear risky to 
    foreign investors, as it suggests that the government may have difficulty repaying its 
    debts in the future. Therefore, it is important for governments to manage their 
    external debt levels carefully and to implement policies that promote fiscal 
    responsibility. One way to do this is by implementing sound macroeconomic policies 
    that promote sustainable economic growth.
    Unstable currency exchange rates can make a country appear risky to foreign 
    investors. Therefore, it is important for governments to implement stable currency 
    exchange rate policies that provide investors with a predictable and stable investment 
    environment. One way to do this is by implementing a fixed exchange rate system, 
    where the value of the local currency is pegged to a stable foreign currency, such as 
    the US dollar. 
    Political stability is also an important factor in attracting foreign direct 
    investments. Countries with unstable political environments are often perceived as 
    risky by foreign investors. Therefore, it is important for governments to promote 


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    political stability and to create a predictable and stable investment environment. One 
    way to do this is by implementing transparent and predictable regulatory frameworks 
    that provide investors with a clear understanding of the rules and regulations 
    governing their investments. 
    Attracting foreign direct investments can bring many benefits to national 
    economies, including job creation, economic growth, and increased competitiveness. 
    Additionally, foreign investors may bring new technologies and expertise to local 
    markets, which can help to promote innovation and productivity 
    In conclusion, managing investment, liquidity and currency risks is crucial for 
    attracting foreign direct investments to national economies. Host countries should 
    implement policies that promote stability and predictability in the investment 
    environment, manage their external debt levels carefully, implement stable currency 
    exchange rate policies, and promote political stability. Ultimately, attracting foreign 
    direct investments can bring many benefits to national economies. 

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    Iqtisodiyotni raqamlashtirish sharoitida buxgalteriya hisobi, iqtisodiy tahlil va auditni xalqaro standartlar asosida rivojlantirish muammolari va istiqbollari

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