Spot Exchange Rate

1. Speculation

1.1. Contributed to the emerging market cries

1.2. Hot money flows into and out of currencies, securities, property and commodities

2. Parity Condition

2.1. Official monetary reserse

2.2. Relative inflation rate

2.2.1. Purchasing power parity

2.3. Relative interest rate

2.3.1. Fisher Effect

2.3.2. International Fisher Effect

2.3.2.1. Foreign exchange risk

2.3.2.2. Default risk

2.3.2.3. Sovereign risk

2.3.3. interest rate parity (IRP)

2.4. Forward exchange rate

3. Political Risk

3.1. Capital controls

3.2. Black market in currencies

3.3. Exchange rate spreads

3.4. Risk premium on securities

4. Cross Border Investment

4.1. Foreign direct investment

4.2. Portfolio Investment

5. Infrastructure

5.1. Strength of the banking system

5.2. strength of securities market

5.3. Outlook for growth and profitablility