Browsing by Subject "Foreign Exchange"

Now showing 1 - 3 of 3
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    Currency convertibility and payments arrangements between the common monetary area and the preferential trade area for Eastern and Southern African states
    (1995) Myerson, Jonathan
    This thesis analyses the impediments of inconvertible currencies on intra-regional trade within the Eastern and Southern African region. Currency inconvertibility is a non-tariff trade barrier which limits and distorts international trade expansion. Therefore, alternative arrangements that may be used in order to remedy this problem are considered. Exchange rate misalignment is identified as a major cause of currency inconvertibility. It is shown that the implementation of macroeconomic policies and exchange rate regimes which are not complementary cause exchange rate misalignment resulting in balance of payments disequilibria leading to currency inconvertibility. Since the preconditions for transformation to full currency convertibility have not been met by most countries in the region this thesis suggests a mechanism that will enable the use of local currencies for intra-regional trade (partial currency convertibility). The most viable arrangement under the prevailing conditions in the Eastern and Southern African region is the reserve fund to which member countries contribute a fraction of their international reserves. This contribution will be determined according to the levels of intra-regional trade in which they engage. This arrangement will guarantee that even if a member state cannot honour its payments' obligation it will be able to draw on the facility to make payment. The advantages of this facility are that it will guarantee that payments for intra-regional trade will be made and that the contributions by member countries will be more affordable than the other arrangements as well as its potential for assisting in creating closer economic relations in the region. The thesis concludes, however, that member countries should be encouraged to move towards full currency convertibility and hence an arrangement for purposes of intraregional currency convertibility should be strictly transitionary.
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    Dual exchange rates : theory, insulation properties and the South African experience
    (1990) Galloway, D W; Kahn, Brian
    Dual exchange rate regimes are not a phenomenon peculiar only to South Africa. In the past they have been implemented by the BLEU, France, Italy and the Netherlands in one form or another. More recently, multiple exchange regimes have been adopted by other developing countries such as Mexico, Brazil, Venezuela and Argentina. The rationale for imposing a two- or multi-tier exchange regime is to protect the balance of payments from volatile short-term capital flows due to political and economic uncertainty inherent in developing economies. The focus of this paper is on the insulation properties of dual market systems against foreign shocks. These shocks may take the form of foreign interest rate increases or increases in foreign perceptions of risk. An implication of these insulation properties is that the monetary authorities are able to pursue a monetary policy independent of external constraints.
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    The treatment of section 24J instruments denominated in a foreign currency with regard to the categorisation as fixed or variable rate instruments and the interaction between section 24J, section 25D (foreign currency translation rules) and section 24I (gains and losses on foreign exchange transactions)
    (2014) Fourie, Susanna Janine.; Warneke, David
    Section 24J is regarded to be one of the most complex provisions in the Income Tax Act No. 58 of 1962. This study specifically focuses on the income tax treatment of section 24Jinstruments denominated in a foreign currency, specifically with regards to whether such instruments are fixed or variable rate instruments for purposes of section 24J and the interaction between section 24J, section 25D (foreign currency translation rules) and section 24I (gains and losses on foreign exchange transactions).The basic concepts surrounding the incurral and accrual of interest for income tax purposes, as well as of some of the general issues faced when section 24J is practically applied are discussed. Importantly it is found that although the definition of 'instrument' includes all debt instruments, regardless of whether such instruments are interest-bearing, the application of section 24J would have no impact on the issuer or holder of an instrument that is a non-interest bearing debt instrument. Also, the section 24J definition of 'interest' is wider than the common law meaning of the same term. However, as 'interest'is defined with reference to itself, the common law meaning is still very relevant. It is confirmed that section 24J poses various interpretational uncertainties which are especially highlighted when some of the key provisions of section 24J are applied in determining the interest accrual amounts based on the yield to maturity method. Applying the rules of statutory interpretation and with the aid of hypothetical examples, itis argued that foreign exchange rates would fall within the definition of a variable rate for purposes of section 24J. However, an instrument denominated in a foreign currency would be regarded as a fixed rate instrument to the extent that the amounts payable are fixed amounts specified in the applicable foreign currency or the calculation of the amount payable in the applicable foreign currency does not involve the application of a 'variable rate' (as defined).Further is it argued that section 24J merely provides for a single accrual or incurral event during each year of assessment in relation to each instrument. Therefore, where accrual amounts be denominated in a foreign currency it should be translated at the spot rate on the last day of the year of assessment (or on the date of redemption/transfer in the instance where the instrument was transferred/redeemed during the year of assessment) for purposes of determining the sum of the accrual amounts to be included in taxable income. It is also argued that the timing of the accrual and incurral of interest amounts in terms of section 24J is applied in establishing the 'transaction date' of the interest amount owing for purposes of determining 'exchange differences' at the end of any year of assessment in terms of section 24I.