An Overview Of Learning Three Theoretical Perspectives Education Essay

An Overview Of Learning Three Theoretical Perspectives Education Essay There are myriad perspectives on the learning process, understanding the mechanisms of and our understanding of learning as theory and the practical application of methodology has evolved considerably over time. Each theory contributes to our understanding of how learners integrate information and experiences from their environment. This has implications for individual growth and also for institutional policy and practice. In this paper I will review three theoretical perspectives on learning, namely the Constructivist/Cognitivist perspective, the Phenomenographic perspective, and the Socio-cultural perspective, I will describe the salient features and characteristics of each theory, and compare the similarities and differences across perspectives. This will include a discussion of how learners access information, make sense of that information, and act on it in deliberate and purposeful ways as a means of engaging with the world. From there I will investigate what these learning theories emphasize or give relevance to the concepts of context, meaning, and experience. The various perspectives each have something to say about the relationship between context, meaning, and experience as they relate to learning, however the importance of these core concepts differs in how each theory conceptualizes learning, and the importance of the role of context, meaning, and experience. Finally , I will conclude with examples that bring these perspectives to life in my everyday experience, and I will bind these theories together within a cohesive understanding of learning and education as it relates to the interrelationship of the concepts of intrinsic motivation, variation, and transfer. Three theoretical perspectives on learning There are numerous theories of learning, each emphasizing a particular feature of the learning experience. Various theories of learning also describe learning in different ways depending on the viewpoint of the observer. Each theory emphasizes ideas related to context, meaning, and experience in different ways as they relate to learning, both from the perspective of the learner and from the instructor/teacher/coach/mentor. Constructivist/Cognitivist Perspective Objectivity is the delusion that observations could be made without an observer (von Foerster, 1995, pg. 5) The Constructivist theoretical orientation holds that knowledge is acquired experientially, is mediated by our prior understanding, and is based on the belief that we learn by doing rather than observing, and that knowledge is built upon previous learning. The essential core of constructivism is that learners actively construct their own knowledge and meaning from their experiences (Doolittle, pg 1) Piaget was primarily concerned with cognitive constructions that occurred as a result of interactions with Constructivism emerged from early studies of learning, behaviour, and psychoanalysis, and the behavioural viewpoints of Watson, along with Kohler and Koffkas Gestalt psychology. (Tools pg. 7) Constructivism as theoretical understanding exists along a continuum from weak to strong forms constructivism This is an adaptive process whereby behaviours evolve to meet the changing demands of the environment, and cognition serves to makes sense of subjective experience. (Doolittle, 1999, 1) Constructivism emerged from schools of behaviourism and objectivism, which held that there was a knowable objective reality that existed independent of the individual. Constructivism takes the view that meaningful personal experience is the basis of knowledge and learning. Individuals construct meaning within a context of personal experience that is rooted in language, culture, and the social experiences of each individual. There can be no objectively verifiable truth or knowledge within constructivism, as each individual brings a unique perspective grounded in their own previous knowing. Much of this knowledge is tacit and resides in the implicit memory of the learner, but it exerts its influence and acts as a filter through which the individual sees new information and relates it to their understanding of the world. Knowledge and thus learning is constructed within the mind of the individual. Constructivism rejects the notion of an objective and knowable reality independent of the observer, and holds that knowledge of the world is constructed through the active cognitizing on the part of individuals. Constructivism rejects the notion of an oberver-independent world in favour of knowledge reflecting the subjective realities of the observer. (Glaserfeld, 1989, p. 3) Knowledge is not a representation of reality, but instead a collection of conceptual structures that turn out to be adapted or, as I would way, viable within the knowing subjects range of experience. (Glaserfeld, 1989, p. 4) Within Cognitive constructivism (explanation of scheme theory, accomodation, assimilation). Cognitive constructivism adheres to models of knowledge construction that consider the role of memory, cognitive constructs, and schemas without considering fully the subjective nature of knowledge as resident within the mind of the subject. Knowledge in this sense implies an internal representation that accurately reflects an observer-independent external reality. (Doolittle, 1999, 2) Radical constructivism differs from cognitive constructivism by advancing the idea that learning is an adaptive process, and that it is observer-dependent and resides in a fluid and dynamic cognition that considers the subjective experience of knowledge construction. Radical constructivism, like social constructivism, also accepts social interactions as informing knowledge construction. Social constructivism takes the view that social interactions contribute to knowing, and views the social and cultural context as anchoring knowledge to a specific time and place. (doolittle pg 4) These various perspectives exist on a continuum, however the most fundamental understandings are shared. We all hold memories of previous experiences; those collected memories and experiences, both tacit and explicit, become the lens through which we view our current unfolding reality. Emerging evidence within the realm of neuroscience and interpersonal neurobiology may predict further homogenization of constructivist philosophy and understanding. Interpersonal neurobiology views the brain as a social organ built through experience. This insight shifts Cognitive Constructivism further along the continuum in the direction of radical and social constructivism by lending supporting evidence to the two remaining epistemological tenets, namely that cognition organizes and makes sense of ones experience, and that knowing has roots in both biological/neurological construction, and social, cultural, and language-based interactions. (Doolittle, 1999) Learning is transactional, with experience influencing cognitive construction and the pliable cognitive constructions influencing our experience in a duality of experience and subjective reality. As Carr states, the growing body of evidence makes clear that the memory inside our heads is the product of an extraordinarily complex natural process that is, at every instant, exquisitely tuned to the unique environment in which each of us lives and the unique patterns of experiences that each of us goes through. (Carr, 2010, p. ) Carr recounts some of the current research on memory and experience, and expands on the idea that our brain structure continuously changes with experience; brain plasticity, the growing and pruning of synaptic connections over time, changes our very memories and our recollections of experience based on new experiences. (Carr, 2010, p. 190) Researcher Kobi Rosenblum further describes how memory, which in a sense is our recalled experience, can be a pliable and moving target. As he explains, ..the human brain continues to process information long after it is received, and the quality of memories depends on how the information is processed. (Carr, 2010, p. 191) Meaning within Cognitivist/Constructivist Perspective Meaning as significance for each perspective, but it is integral to an understanding of constructivism. Meaning is central to the intentionality of learners; relevance and meaning enhance a learners ability to relate with their world. It also relates to concepts of motivation as it relates to a learners sense of agency and engagement with their experience, ad it highlights the importance of culture and language as social mediators of learning The importance of these memory mechanisms to the development of cognitive psychology is that, once understood, they make it very clear that a persons ability to remember items is improved if the items are meaningfully related to each other or to the persons existing knowledge. The key word here is meaningful.Wynn pg.4 What is meaningful to people is determined by what they can remember of what they have already learned. Wynn pg 4 Opportunities for learning within a constructivist framework occur most readily when what is being learned has relevance or high emotional valence for the learner; in other words when information or experiences are meaningful. In order for learning to be meaningful it should be relatable to previous knowledge and experience. This building-block model of knowledge and experience is entirely consistent with a learner as meaning-maker. The implications for teaching and educational pedagogy are that tasks that have meaning and relevance tend to be of greater intrinsic interest to learners. Research on the experience of learning speaks to the importance of meaning as it relates to knowledge construction, and speaks of the importance of autonomy, agency, choice, and collaboration in driving our instrinsic motivational desires to engage in meaningful tasks, remember and recall information, self-organize, and be curious. A learning context rich in meaning is crucial. Context within Cognitivist/Constructivist Perspectives Learning occurs most successfully at the intersection of a learners previous knowledge of the world and the experience of socially mediated interactions with others, and is influenced by all accumulated social and cultural experiences. (Bodrova Leong, 2007, p. 9) The context for learning resides within the experience and imagination of the learner, and is rooted in prior experience and is mediated by teachers/facilitators and the ecological setting or context. Within this learning context, Feuerstein describes the role of mediation. The mediator creates in a person an approach, a form of reference, a desire to understand phenomena, a need to find order in them, to understand the order that is revealed, and to create it for oneself. (Feuerstein, Feuerstein, Falik, 2010, p. 37) Mediators can take many forms, but they share in common an ability to potentiate a learners ability to benefit from learning experiences. In the absence of a mediator, even in cases where individuals acquire knowledge, they may not understand its significance. (Feuerstein et al., 2010, p. 37) Experience within Cognitivist/Constructivist Perspectives As learners construct their own experiential reality within a social and cultural context, the dyadic interactions that unfold imply a degree of collaboration and engagement with learning that is intrinsically motivated by a meaningful context within which learning occurs/unfolds. Collaborative learning is by its nature socially constructed learning, where the interest of learners is central, meaningful, and contextual. Decontextualized learning by contrast lacks a sense of connection to the experience of learning. Prior experiences of learning are diminished when there is no meaningful context, and authentic experiential learning suffers. When choice around structure and content is collaboratively negotiated, learners are granted a level of autonomy around how and what they learn, and experiences that are meaningful place learning within a context more suitable to the learning style, goals, and priorities of the learner. Kohn emphasizes these conditions of collaboration, content, and choice, as creating the conditions necessary for authentic and intrinsically motivated learning to emerge. (Kohn, ) Phenomenograpy/Variation Theory There is no learning without discernment. And there is no discernment without variation. (Marton, Trigwell, 2000) The theory of phenomenography is connected with the study of human experience, particularly as it relates to educational research. Phenomenography examines thinking and learning within the context of educational research, and seeks understanding of the different ways in which people experience, interpret, understand, perceive, or conceptualize a phenomenon, or certain aspect of reality. (Orgill, ) Marton defines phenomenography as a qualitative research methodology, within the interpretivist paradigm, that investigates the qualitatively different ways in which people experience something or think about something (Marton, 1986). One of the key epistemological tenets related to Phenomenographic theory relates to concepts of variation, discernment, and transfer. Marton postulates that in order for learning to occur, there must necessarily be a pattern of variation present to experience, and this pattern must be experienced. (Marton, variation, pg.1). In order for learning to occur, learners must experience a wide range of variation in experience, with sameness or similarity contributing little to our understanding of experience. Variation and difference create a broader context for understanding experience, and also expand our repertoire when encountering novel situations or circumstances. This transfer of learning is integral to variation theory and a key underpinning of phenomenography. Experiencing difference or variation may be likened to experiences of cognitive dissonance within constructivist models of learning, where an individual experiences dissonance and a perturbation and must adjust their conception of this new information within their existing paradigm. How we categorize, makes sense of, or identify with that difference relates to our discernment skills. Discernment allows a subject to see or sense an experience against the background of his or her previous experiences of something more or less different. ( Marton, pg.386). In essence, as subjects experience greater variation they become more attuned to increasingly subtle differences between the physical, cultural, symbolic, or sensual world that they inhabit. (Marton, pg 386) Every phenomenon that is experienced only in contrast to alternate experiences of the same phenomenon (marton, pg 387) The implications for pedagogy center on the manipulation of the objects of variation in order for learners to experience variation, become adept at discerning, and transfer learning across situations. Excellence in teaching has very much to do with what aspects of the object of learning are subjected to variation, and what aspects of the object are subject to variation simultaneously. (Marton, pg. 391) Subjects learn to manage novelty as a result of having experienced novelty through variation. (Marton, pg. 394). Transfer is concerned with how what is learned in one situation affects or influences what the learner is capable of doing in another situation. (Marton, pg. 499) Meaning within Phenomenographic/Variation Theory Perspective Context within Phenomenographic/Variation Theory Perspective A concept that illuminates ideas of context within the phenomenographic perspective relates to concepts of situated learning. Situated in this instance refers to what surrounds the learning event; that is, to the socially constructed life-world in which a particular instance of learning occurs. (Sameness in transfer, pg. 511) Sameness and difference in learning and experience are acknowledged, however the extent to which we can make use of something we have learned in one situation to handle another situation is a ma Conclusion Learning is not simply acquiring new information and storing it on top of the information we already have. It involves meeting something unexpected (what might describe as a perturbation), something that cannot be easily explained by those theories or understandings we have already developed. To resolve that conflict we have to change what we previously believed (kohn, pg 187) This explanation is the tie that binds constructivism, variation, theory and scheme theory to social learning, along with ideas of motivation and personal agency.

Mary Schapiro and Leadership Essay

In her role at the SEC, Mary Schapiro was known as one of the world’s most powerful female regulators. She was named chair in the midst of the worst financial crisis since the Great Depression. As chairman, she helped strengthen and revitalize the agency by overseeing a more rigorous enforcement program and shaping new rules for Wall Street. During her tenure, the agency’s work force brought about a record number of enforcement actions and achieved significant regulatory reform to protect investors. Schapiro leaves behind an agency that has regained its footing, stature, and morale following desultory leadership under its previous two chairmen and its embarrassing lack of action preceding the financial crisis. Under Schapiro, the SEC, which is usually thought to be the most prominent and important financial regulatory body in the country, brought a huge number of enforcement actions against financial institutions. Her job was to assess what went wrong and to ensure it d idn’t happen again. During four years as SEC chairman, Schapiro presided over one of the busiest rule-making agendas in the SEC’s history, during which the agency also brought a record number of enforcement actions, and executed a comprehensive restructuring program to improve protections for investors. Upon her departure, President Obama praised her leadership, saying the SEC became stronger and the financial system â€Å"safer and better able to serve the American people-thanks in large part to Schapiro’s hard work.† Change Management Change management is designed to ensure the effective transition of an organisation and its people from the current to future states, and in so doing support the realisation of business benefits. In the context of strategy, it is the realisation of the strategic plan. Change management is about effectively leading and managing individuals, teams, and the organisation to successfully adopt the changes needed to achieve required or desired business results. Success in Organisational Change Follows Recognisable Patterns – Kotter’s 8 Steps Harvard Business School Professor John Kotter is well known for identifying a pattern for leading successful organizational change. Yet, we cannot be sure that the President, members of Congress, and key Federal Reserve, Department  of the Treasury, and SEC personnel (including Chairman Schapiro) are familiar with this work and with other similar guidance from change leadership literature. And even if some or all of the change agents impacting a restructuring of the SEC are familiar with this work, it is unclear whether any of those change agents are consciously using this learning and incorporating useful elements from Kotter’s books into the SEC reorganization process. Studies of organizational change have shed significant light on the elements of a successful reform effort. Leaders effectuating reform at the SEC do not have to â€Å"reinvent the wheel† as they initiate, manage, and institutionalize organizational change. Kotter’s model is organized into eigh t stages designed to address eight observed mistakes made in efforts for organizational change: â€Å"establishing a sense of urgency†; â€Å"creating the guiding coalition†; â€Å"developing a vision and strategy†; â€Å"communicating the change vision†; â€Å"empowering broad-based action†; generating short-term wins†; â€Å"consolidating gains and producing more change†; and â€Å"anchoring new approaches in the culture.† Each stage has identifiable characteristics. 1. Establishing a Sense of Urgency â€Å"Visible crises can be enormously helpful in catching people’s attention and pushing up urgency levels.† To be sure, the SEC has experienced visible crises over the past few years. Admissions of significant failures at the SEC extend back over more than two years’ time and cover multiple areas of SEC operations. â€Å"The natural superiority of the U.S. model for securities regulation is no longer an article of faith, and the credibility of the SEC as a financial regulator has never been lower.† although the SEC has long been â€Å"the crown jewel of the financial regulatory infrastructure,† recent developments have called that characterization into question. The SEC has been the target of relentless criticism ranging from claims that it mishandled derivatives regulation, oversight of securities firms, and market risk, to assertions of delays and blunders and possible industry capture at the Division of Enforcement. These criticisms followed th e Treasury Department’s Blueprint of Financial Regulation-released in March 2008-that criticized the SEC’s approach to regulation as obsolete and proposed a plan of regulatory consolidation that would effectively lead to the agency’s demise. Most recently, the revelation that the SEC failed to discover a $50 billion Ponzi scheme at Madoff Investment Securities, despite having received allegations of wrongdoing for over a decade, suggests fundamental weaknesses in its core enforcement operations. To be successful at organizational change, however, a change leader must use the crisis to shake up the organization. This requires that the change leader â€Å"remove sources of complacency or minimize their impact† and take actions that are â€Å"bold or even risky.† Kotter uses the concept of fire in a building as a proxy for crisis in an organization, writing that â€Å"conducting business as usual is very difficult if the building seems to be on fire.†Interestingly, Chairman Schapiro invoked fire imagery in comments to reporters as she made changes to SEC operations shortly after taking office. Moreover, in a recent speech, Chairman Schapiro noted the rapid pace of change at the SEC over the preceding year: I know that change is hard because within our agency we have been engaged in some of the most significant change in decades. When I arrived at the agency last January, we began a process of assessing our operations and determined we could do better. We de termined that we needed to change. And that is the path we have chosen. The personnel changes instituted at the SEC may be seen as examples of sweeping change. The discomfort and discontent of the SEC staff in response to the personnel changes may be evidence of the brash nature of these personnel changes. Kotter’s work predicts this kind of reaction. He notes that â€Å"bold moves that reduce complacency tend to increase conflict and to create anxiety, at least at first.† 2. Creating the Guiding Coalition Leading change is not a solitary task. Because major change is so difficult to accomplish, a powerful force is required to sustain the process. No one individual, not even a monarch-like CEO, is ever able to develop the right vision, communicate it to large numbers of people, eliminate all the key obstacles, generate short-term wins, lead and manage dozens of change projects, and anchor new approaches deep in the organization’s culture. Instead, what is required is a strong leadership team-a team â€Å"with the right composition and sufficient trust among members.† In terms of composition,  Ã¢â‚¬Å"four key characteristics† are important: â€Å"position power†- the entire group who will be charged with making progress in areas of needed change, â€Å"expertise,† â€Å"credibility,† and â€Å"leadership.† Trust is borne of activities that â€Å"create . . . mutual understanding, respect, and caring.† Trust is important because it can lead to the effective creation of a â€Å"common goal† or â€Å"shared objective.† Chairman Schapiro has changed the leadership team at the SEC. We must question, however, whether the team has the right characteristics and the requisite trust. Certainly, the credentials of the SEC Commissioners are quite impressive in terms of expertise, credibility, and leadership skills. Chairman Schapiro has put a premium on attracting to the SEC people with an expansive set of experiences and skills. Moreover, the published remarks of new leaders in the Division of Enforcement-people with position power-are impressive in their indication of a collective change momentum. New leaders continue to emerge, making the membership of the guiding coalition unsettled and unclear. The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there. No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. In general, public information sources are not detailed enough to enable a comprehensive assessment of the suitability of the composition of Chairman Schapiro’s guiding coalition. For example, according to Kotter, â€Å"you need both management and leadership skills on the guiding coalition, and they must work in tandem, teamwork style.†He offers matrices that illustrate optimal compositions. Publicly available information does not enable us to determine whether or not the SEC guiding coalition has the optimal balance of management and leadership skills. Only as the exact identity of the leadership te am emerges and the team takes concerted and coordinated action will we be able to evaluate its composition. As difficult as it is for us to appraise the team’s composition, it is more difficult for us to assess whether the guiding coalition has the required trust. Although I have not found evidence that ostensible members of the SEC guiding coalition have engaged in team-building exercises or attended a retreat at which intra-group trust may have been engendered, the SEC’s recent self-assessment’ may be a sign that mutual trust is being promoted throughout the agency. As new people are identified for inclusion on the change leadership team, they will need to be effectively brought into the â€Å"circle of trust.† 3. Developing a Vision and Strategy To achieve successful organizational change, a leader needs to have both vision and a strategy to implement that vision. â€Å"Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future.† Vision serves to channel change in a particular direction and incentivizes and coordinates change in that direction. Chairman Schapiro seems to understand this aspect of change leadership, and she also seems to be incorporating it into the SEC’s operations. Her vision for a reformed SEC refocuses the SEC’s activities on one of the key policy underpinnings of the federal securities laws: investor protection Another lesson I have learned is to have a vision about where you want to take your organization and stick to your principles in getting there. Principles are not ideologies. They are different. Maybe it’s a question of degree. Maybe to some it’s semantics. But as I see it, unlike ideologie s, principles don’t seem to demand a particular answer to every problem that emerges. We’ve seen how strict adherence to ideology played out over the last decade in the financial arena. â€Å"Free market ideology† together with rapidly changing technology, globalization and many other accidental causes led too many of us to forget hard-learned lessons from past crises and abandon basic common sense. Principles, on the other hand, help frame a question, an issue or a problem. Having a principle might highlight tensions and trade-offs of particular choices, but rarely do they force you to choose between a good solution and a worldview. For me at the SEC, my main principle is putting investors first. And, I try to stay focused on that every day. And the goal is to build an SEC that is deeply expert, nimble, and aggressive-that gives investors confidence. In fact, as Bob Glauber can attest, I have a sign posted on my door that says â€Å"How does it help investors?† It’s a simple question, but it guides all that I do at the SEC. And, all those who enter my office understand that is the prism through which we will consider all issues. It doesn’t necessarily dictate the outcome of every issue that lands  on my desk-because there are many solutions to any problem that could aid investors. But, the principle helps to shape our thinking and steers us in the right path. Vision is implemented through strategy. â€Å"Without vision, strategy making can be a much more contentious activity†¦. Even more so, without good vision, a clever strategy or a logical plan can rarely inspire the kind of action needed to produce major change.†Ã¢â‚¬Ëœ Chairman Schapiro’s vision has guided structural and operational change at the SEC as well as substantive rulemaking. Some credit her clearly conceived vision and the related rapidly employed strategy for saving the SEC from more significant structural or operational change. 4. Communicating the Change Vision According to Kotter, the larger the audience for the change vision, the more powerful it may be. A great vision can serve a useful purpose even if it is understood by just a few key people. But the real power of a vision is unleashed only when most of those involved in an enterprise or activity have a common understanding of its goals and direction. That shared sense of a desirable future can help motivate and coordinate the kinds of actions that create transformations.’ A leader must be careful to communicate the change vision broadly, frequently (repeatedly), and consistently. The message conveying the vision must be direct, clear, simple, and geared to its targeted audiences. Metaphors, analogies, examples, and florid prose may be helpful in this regard. The means of conveying the message should be varied: oral and written, large forum and small group, and through words and actions. Finally, to ensure understanding, the communication of the vision should be a two-way street , involving both give and take as well as conveying and listening.† Chairman Schapiro has engaged in significant public speaking in which she has regularly and repeatedly informed and reminded the SEC staff and various elements of the public about the SEC’s recommitment to investor protection and the linkage of that vision to structural and operational changes at the SEC. Chairman Schapiro regularly appeared before congressional committees and subcommittees, and she has communicated her vision in these arenas as well. She used memorable analogies, examples, and words to convey the SEC’s organizational change message.’ Evidencing an appreciation for two-way communication, soon after  her appointment, Chairman Schapiro took action in response to staff suggestions that enforcement efforts against corporate violators of the securities laws were too difficult. Moreover, the self-assessment process and related ongoing staff communications are evidence of two-w ay communication about the structural and operational changes that have been taking place at the SEC. And Chairman Schapiro has continued to express belief in capturing a variety of viewpoints in decision-making. 5. Empowering Employees for Broad-Based Action To implement the leader’s vision, employees need to be able to take action. This may mean clearing away structural barriers, skill deficiencies, systemic obstacles, and supervisory impediments that may forestall effective employee participation in change efforts. Many of the structural and operational reforms implemented by Chairman Schapiro appear to be designed to empower SEC staff members for action that carries forward the change vision of the SEC. The efforts of Chairman Schapiro to listen and respond to staff concerns about unnecessary enforcement hurdles are examples of initiatives to streamline structure. In addition, the restructuring of the Division of Enforcement is geared to clear structural barricades to effective enforcement efforts.’ The decision to retain staff with â€Å"non-traditional skills† and the implementation of new staff training are examples of efforts to remedy skill deficits. Human resources and information systems have been or are be ing improved in response to deficiencies identified in the SEC’s self-assessment and the OIG’s investigation, report, and recommendations. In the Division of Enforcement, supervisory positions are being eliminated, supervisory personnel are being replaced, supervisory responsibilities are being realigned, and supervisory attitudes that may have impeded investigations are being corrected.’ 6. Generating Short-Term Wins Because the organizational change process is slow and constituents can be impatient, it is important for a change leader to accomplish certain limited objectives in the short term. Major change takes time, sometimes lots of time. Zealous believers will often stay the course no matter what happens. Most of the rest of us expect to see convincing evidence that all the effort  is paying off. Nonbelievers have even higher standards of proof. They want to see clear data indicating that the changes are working and that the change process isn’t absorbing so many resources in the short term as to endanger the organization. To be effective in sustaining organizational change efforts, short-term wins must be â€Å"both visible and unambiguous.†Ã¢â‚¬Ëœ They also must be â€Å"clearly related to the change effort.† And in an effective change effort, they are planned, not accidental.’ SEC Chairman Schapiro accomplished some highly publicized early wins after her appo intment was confirmed. In particular, she swiftly moved to remove perceived barriers to enforcement of the securities laws against public companies. She publicly promoted these changes, and they were picked up by the news media.’ These efforts generated support in and outside the SEC. The achievement of these short-term wins on a staggered but consistent basis has kept the SEC’s structural and operational reforms in front of the SEC’s staff and the public, building consensus around and momentum for the SEC’s self-initiated reform efforts and distracting attention from more substantial externally generated suggestions for change. 7. Consolidating Gains and Producing More Change The long-term time horizon for organizational change not only makes short-term wins advisable, but also may make early declarations of victory problematic. It is important that the sense of urgency created by the change leaders is sustained for the long haul. Short-term wins are essential to keep momentum going, but the celebration of the wins can be lethal if urgency is lost. With complacency up, the forces of tradition can sweep back in with remarkable force and speed. Although a rapid, consistent pace of change at the SEC was sustained over the first fifteen months of reform, Chairman Schapiro as well as other SEC change leaders, needed to maintain the change momentum by continuing to introduce reforms on a regular basis. Having gone so far, the SEC could have lost all of the gains it had made in organizational change merely by relaxing into complacency. â€Å"Until changed practices attain a new equilibrium and have been driven into the culture, they can be very fragile.†Ã ¢â‚¬Ëœ To reach that equilibrium, in addition to engaging in more and continuous change, the SEC should bring in additional change agents, continue to foster leadership from its senior managers, recruit and nurture project management and leadership from lower ranks in the hierarchy, and identify and decrease or eliminate unnecessary internal structural and operational interconnections that often make change efforts more complex.’ These types of efforts in change management are difficult and pervasive. 8. Anchoring New Approaches in the Culture Finally, to prevent regression, change leaders must address and resolve any incompatibilities between the changes that have been made and the organization’s culture-friction in the group’s system of behavioural norms and shared values. This is not as easy as it may sound. These norms and values may apply to the organization as a whole or only to certain parts of the organization, and it is important to achieve compatibility on both levels. Moreover, culture is change-resistant and nearly invisible. Yet, the failure to address inconsistencies between a change effort and the prevailing culture can undo years of reform.’ Accordingly, it was important that Chairman Schapiro understood the applicable behavioural norms and shared values of the SEC and the Enforcement Division and their respective relevant cultural sub-groups as they continue to reform the SEC and the Enforcement Division. Because the core vision of investor protection should not be entirely inconsisten t with the SEC’s culture (in whole or in pertinent part), these and other change leaders at the SEC should be able to â€Å"graft the new practices onto the old roots while killing off the inconsistent pieces.† The important thing will be for the SEC’s change leaders to continue to remember the organization’s heritage and link it to the organization’s new and ongoing operations and objectives.

A Report On Foot Locker - 1032 Words

Foot Locker is one of the largest and leading sporting good stores in the nation. Foot Locker has provided quality tennis shoes and other active wear for many years; they are still one of leading retail stores in today’s society. This company has shoes and sporting gear for the entire family. Foot Locker has stores that only cater to the women, men, and kids. Foot Locker operates about 3,500 stores all over the world. According to Investors Daily Business, (2015) â€Å"Nike and Foot Locker experienced decent traffic and conversions to sales in the month of August, said Retail Metrics Ken Perkins last Monday, adding that at leisure apparel and athletic footwear have been doing well in the back-to-school season (Nike, Foot Locker Are Racing Ahead Of The Market, 2015).† There are many people that enjoy recreational activities that wear this apparel outside a day at the gym. This year marketing for Back to School was a success for this retail company. Children went back to school with the latest fashionable footgear, from Nikes to Reeboks. Super star tennis player â€Å"Serena Williams† even enjoys the comfort of one wearing one of Foot Locker’s leading line of clothes (Low, E. 2015).† brands sold at this company such as Under Armor. The numbers in sales were phenomenal this year for Under Armor; According to Elaine Low with Investor’s Business Daily (2015) â€Å"Nike is continuing to show dominance on the tennis court this week as Roger Federer, Serena Williams and others sport theShow MoreRelatedFoot Locker At The Athletic Shoe Industry1734 Words   |  7 PagesFoot Locker is one of the top competitors in the athletic shoe industry. Foot Locker Inc. accounts for a market leading 40% of industry revenue (IBISWorld, 2014). Foot Locker’s first retail location was opened on September 12, 1974 in City of Industry, Califor nia. 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An Interim Report On Currency Hedging Essay Example Pdf - Free Essay Example

Sample details Pages: 18 Words: 5460 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The project involves understanding of Foreign Exchange and Currency Hedging related to Indian Economy. This basically will deal into studying various factors leading to currency movements both domestic as well as international. To understand the importance of Currency Hedging to corporates and business houses, advantages and various shortcomings that they face. Don’t waste time! Our writers will create an original "An Interim Report On Currency Hedging Essay Example Pdf" essay for you Create order The project aims to understand the major issues in Currency hedging, how currency hedging can be used to protect against currency volatility and seeks to find solutions to the problems faced in hedging. The project specifically focuses on how currency futures can be used to carry out currency hedging. Initially the meaning need for currency hedging is understood. Next, the various tools for currency hedging such as forwards, futures, options and natural hedges is understood. Further part explains in detail how currency futures can be used to carry out hedging. The comparison, merits and demerits of different tools of hedging is explained later. The Project gives the challenges for currency hedging and proposes certain solutions to the issues involved in hedging. The practical experience of client involvement will be dealt through phases of interaction, acquisition and servicing. Also an overview of commodities like gold and crude oil, their effects on currency is dealt with . The overall understanding of hedging in currency and the practical implications that the client foresees is thus understood. Thus this project also portrays the marketing side of financial instrument, currency. Introduction My Management Internship is at Almondz Global Securities Ltd. (AGSL), Mumbai. The company is one of the leading Investment Banks in India. The company was incorporated in 1994 and is listed on the BSE and NSE. The company offers various financial avenues to its clients such as Corporate Finance, Debt PMS, Equity Broking, Commodity Broking, etc. The project assigned to me is on Currency Hedging. This project aims to increase my theoretical as well as practical knowledge. The project requires the basics about the Forex market. Understanding the various platforms like derivatives, etc. that the company offers through Multi Commodity Exchange (MCX). This helped us understand how Currency Hedging is done through derivatives like Forward, Futures, Options, etc. Also the factors influencing Currency Movements in Domestic as well as International economy is dealt with. The implications of Currency Volatility in each and every segment of the market are understood. Currency is the m edium of exchange. Every transaction is carried out in the world with the expectancy of currency in return. Therefore, it is of utmost importance that any changes in currency can affect millions. Any slight fluctuation in the currency can affect the economy accordingly. Currency risk essentially comes from the movement in the exchange rate between two currencies. The price at which you will be able to buy or sell a certain amount of currency will be affected by the currency movement. Any business or individual looking to reduce currency risk and remove a certain level of uncertainty from its future currency transactions, there is tool called as Hedging. Globalization and integration of financial markets, coupled with progressive increase of cross-border flow of capital, have transformed the dynamics of Indian financial markets. This has increased the need for dynamic currency risk management. Main Text Globalization and incorporation of financial markets, in addition to modern increase of cross-border flow of capital, have modified the characteristics of Indian Financial Markets. This has increased the need for powerful Forex risk management. The stable rise in Indias move along with liberalization in Forex trading program has led to large influx of foreign currency into the system in the form of FDI and FII investment strategies. In order to offer a liquid, clear and vivid market for Forex rate risk management, Securities Exchange Board of India (SEBI) and Reserve Bank of India (RBI) have allowed dealing in currency futures on stock exchanges for the first time in India, initially based on the USDINR exchange amount and therefore on three other Forex sets EURINR, GBPINR and JPYINR. The USDINR futures contract is being exchanged on MCX-SX with more than US$ 3 billion average daily turnover. This would give Indian businesses another tool for securing their Forex risk effectiv ely and efficiently at clear rates on an electronic trading platform. The primary purpose of exchange-traded currency derivatives is to offer a procedure for price risk management and consequently offer cost bend of expected future prices to enable the industry to protect its Forex exposure. The need for such instrument increases with increase of foreign exchange volatility. Whether you are an individual looking to travel offshore, or planning to send cash to loved ones offshore, you will be suffering from Forex activity. In the same way, if you are in business of imports or exports of products or services you will either receive or transfer cash that will be suffering from currency fluctuation. For businesses, currency volatility have a huge effect on performing worldwide company. Large movements in the Forex can often result in big drops for companies that have not considered securing of their Forex risk exposure Theoretically currency risk is variation in the value of an ex posure due to concern about exchange rate changes. Currency risk basically comes from the activity in the exchange rate between two currencies. The cost at which you will be able to buy or offer a certain amount of currency will be suffering from the currency movement. If you are in business or individual looking to reduce your currency risk and remove a certain level of uncertainty from your future currency transactions there is tool called as Hedging. The best way to comprehend hedging is to think of it as INSURANCE. When people decide to hedge, they are assuring themselves against a bad occurrence. This doesnt avoid a bad occurrence from occurring, but if it does occur and youre effectively hedged, the effect of the occurrence is decreased. So, hedging happens almost everywhere, and we see it every day. For example, if you buy an automobile insurance, you are securing yourself against robbery, accident etc. In the same way when you guarantee your equipment, godown or wareho use, you are securing against fires, break-ins or other unexpected problems. Hedging means taking place in futures market that is opposite to a position in a physical market with a perspective to decrease or restrict risk coming up of unforeseen changes in currency rate. Corporates use hedging methods to decrease their currency risks. Of course, nothing is free in this world, so one has to pay for this insurance policy in one type or another. Hedging is a strategy by which one can manage risk. It is a tool by which you can decrease potential loss. The most regularly used hedging tools are forwards and futures. Hedging vs. Trading The difference between hedging and trading corresponds to risk existing before access into the futures/forward market. The trader begins with no risk and then goes into a deal that requires risk in order-one hopes-to make earnings. The hedger, however, begins with a pre-existing risk produced from the regular course of his or her conventional business. Futures/forwards are then used to decrease or remove this pre-existing exposure. These contracts may be used to protect some or all of such risk, basically by fixing the price or exchange rate associated with the appropriate exposure. Once so hedged, the business is protected from the consequences of following changes in the exchange rate, either positive or negative. Need for Hedging When you hedge, you are protecting yourself against currency risk. In other words, hedging is a tool for currency risk management. Currency risk is the risk arising out of fluctuations in exchange rates. Today, importers and exporters face the risk of their margins being eroded on account of excessive volatility in currency. Hedging allows the importers/exporters to focus on his core business and not worry about currency movements. Earlier, the rupee was not very volatile. But, in the past few months, rupee has shown a lot of volatility. In 2011, rupee depreciated from Rs.43.80 to a dollar to Rs. 54.20 levels, a change of around 23%. However, in January the rupee logged its best monthly gains in 17 years to rise to Rs.49.05. CURRENCY VOLATILITY IN THE PAST FEW MONTHS Figure USDINR Chart Note: The various events represented by the numbers are: 1. Dec 15: RBI Circular saying forward contracts once cancelled, cannot be rebooked. 2. Jan 31: The rupee logged its best m onthly gains in more than 17 years in January 3. March 7: The rupee fell to a seven-week low early on Wednesday, extending a slide to a fifth consecutive session, on strong demand for dollars from oil refiners and slowing capital inflows as global risk appetite wanes. 4. Mar 22: Rupee off 2-month low on possible RBI dollar sales i.e RBI intervention 5. Mar 30: Data released revealed that Indias balance of payments fell into negative territory in the December quarter for the first time in three years 6. May 10: To curb the slide in the rupee, the Reserve Bank of India has asked exporters to convert 50% of their dollars held in Exchange Earners Foreign Currency (EEFC) accounts into rupee. The central bank has also ruled that exporters can henceforth access the forex market for buying dollars only after they have utilized the balance in their EEFC accounts. Thus, we can see that currency moves on account of a multitude of factors such as RBI intervention, FII inflows, FI I outflows, inflation and interest rate differentials, current account deficit, changes in Govt. policy etc. This currency movement is outside the control of an enterprise. In other words, it relates to the external environment and can be a threat for importers, exporters, enterprises who have taken foreign currency loans and those who invest abroad. Though the external environment cannot be controlled, there are certain risk management tools available to an enterprise in order to manage currency risk. Hedging is one such tool. Participants of MCX-SX currency futures A host of benefits are available to a wide range of financial market participants, including hedgers (exporters, importers, corporates and Banks), investors and arbitrageurs on MCX-SX. Hedgers: A high-liquidity platform for hedging against the effects of unfavourable fluctuations in the foreign exchange markets is available on this exchange. Banks, importers, exporters and corporate houses hedge on MCX-SX. Investors: All those interested in taking a view on appreciation or depreciation of exchange rate in the long and short term can participate in the MCX-SX currency futures. For example, if one expects depreciation of the Indian Rupee against the US dollar, then one can hold on long (buy) position in USDINR contract for returns. Contrarily, one can sell the contract if one sees appreciation of the Indian Rupee. Arbitrageurs: Arbitrageurs get the opportunity of trading in calendar spreads and inter currency spreads; on the existing contracts on the exchange. Factors influencing currency exchange rate Currency exchange rates are typically affected by the supply and demand of a particular countrys currency in the international foreign exchange market. The level of confidence in the economy of a particular country also influences the currency of that country. Major factors influencing the currency market: Inflation rates Interest rates Trade balance Central bank intervention Global and domestic stock markets Global and domestic economic indicators Global currency movement Economic and political scenarios Crude oil price movement Beneficiaries of Hedging Importers and exporters: Importers need to protect themselves from rupee depreciation and exporters need to protect themselves from rupee appreciation. Foreign bound students: If rupee depreciates, then students who want to study abroad will have to pay more rupees as their fees. Such a student can hedge the amount payable as fees. Foreign currency denominated loans: There are many companies which take taken ECB/FCCBs, the value of these loans keeps on changing on account of rupee fluctuations. Thus, if the rupee depreciates, more rupees need to be paid while repaying these loans. Corporates can hedge these loans and protect themselves from currency volatility. Foreign bound travellers: A person who wants to travel abroad has to protect himself from currency depreciation. Such a person can hedge the amount required as his tour expenditure. Tools for Hedging The most commonly used tools of hedging are futures and forwards. You can also enter into an option contract in order to hedge. In India, hedging through futures is carried out through MCX while hedging through forwards is carried out through banks. You cannot use options in order to carry out hedging through MCX. However, currency options are available on NSE. Forwards A forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into. Option An option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price (the strike). The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfil the transaction. The price of an option derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or a futures contract) plus a premium based on the time remaining until the expiration of the option. Swaps An arrangement in which two parties exchange specific amounts of different currencies initially and a series of interest payments on the initial cash flows are exchanged. Often, one party will pay a fixed interest rate, while another will pay a floating exchange rate (though there may also be fixed-fixed and floating-floating arrangements). At the maturity of the swap, the principal amounts are exchanged back. Unlike an interest rate swap, the principal and interest are both exchanged in full in a currency swap. Natural hedge Natural Hedging involves to the extent possible, foreign currency outflows with inflows. There are certain companies which have assets in foreign countries as well as they import a lot of raw materials from foreign countries. The offshore assets serve as a natural hedge against the depreciating currency. E.g. Tata Steel has a lot of assets in Europe (Corus) and it also imports a lot of raw materials for the purpose of producing steel. Thus, if the rupee depreciates, the Balance Sheet is converted at a higher rate but it has to may much more for imports. An example of operational hedging is relocating the production facilities of Japanese car manufacturers for example who used to supply cars to the American market in the entirety, earlier used to export them from Japan. But now they have set up factories in the USA, thus reducing their exposure to the fluctuating Yen/dollar rate. Similarly, an oil producer may expect to receive its revenues in U.S. dollars, but faces cos ts in a different currency; it would be applying a natural hedge if it agreed to, for example, pay bonuses to employees in U.S. dollars. Technical Specifications of MCX Futures Hedging through MCX futures can be carried out in four currency pairs viz. US dollars to Indian rupees (USDINR) Euro to Indian rupees (EURINR) Japanese Yen to Indian rupees (JPYINR) Great Britain Pound to Indian rupees (GBPINR) The lot size is of 1000 dollars/1000 Pounds/1000 Euro. Trading Hours 9:00AMto5:00PM (Monday to Friday) Contract Size US$1,000 Price Quotation INR per USD , EUR ,GBP and JPY Tick Size INR0.0025 Minimum Initial Margin 1.75% on first day1% thereafter Contracts All months with a maturity duration of 12 months Settlement Mechanism Cash Settled in Indian Rupee Final Settlement Rate RBI USD INR Reference Rate Final Settlement Date Last working day of month, except Saturday. RBI Reference Rate RBI reference rate is the rate published daily by RBI for spot rate for various currency pairs. The rates are arrived at by averaging the mean of the bid/offer rates polled from a few select banks during a random five minute window between 11:45 AM and 12:15 PM and the daily press on RBI reference rate is be issued every week-day (excluding Saturdays) at around 12.30 PM. The contributing banks are selected on the basis of their standing, market-share in the domestic foreign exchange market and representative character. The RBI periodically reviews the procedure for selecting the banks and the methodology of polling so as to ensure that the reference rate is a true reflection of the market activity. The reference rate is a transparent price which is publicly available from an authentic source. Settlement Currency futures contracts have two types of settlements, the MTM settlement which happens on continuous basis at the end of each day, and the final settlement which happens on the last trading day of the futures contract. Mark-to-Market settlement (MTM Settlement) All futures contracts for each member are marked to market to the daily settlement price of the relevant futures contract at the end of each day. Final settlement for futures On the last trading day of the futures contracts, after the close of trading hours, the Clearing Corporation marks all positions of a CM to the final settlement price and the resulting profit/loss is settled in cash. Comparison between Forward Contract and Futures Contract Forward Contract Futures Contract Guarantee No guarantee of settlement until the dateÂÂ  of maturity only the forward price Both parties must deposit an initial guarantee (margin) Expiry date Depending on the transaction Standardized Transaction method Negotiated directly by the buyer and seller Quoted and traded onÂÂ  the Exchange ContractÂÂ  size Depending on the transaction and the requirements of the contracting parties. Standardized Institutional guarantee The contracting parties Clearing House Market regulation Not regulated Government regulated market Risk High counterparty risk Low counterparty risk Structure CustomizedÂÂ  to customers need. Usually no initialÂÂ  paymentÂÂ  required. Standardized. Initial margin paymentÂÂ  required. Method of pre-termination OppositeÂÂ  contractÂÂ  with same or different counterparty. Counterparty risk remains while terminating with different counterparty. OppositeÂÂ  contractÂÂ  onÂÂ  the exchange. ContractÂÂ  Maturity ForwardÂÂ  contractÂÂ  mostly mature by delivering the commodity. Future contracts are generally cash settled. Hedging Example Exporter Transaction: Exporter executes an export order on 1st Nov 2011 has inflows of $1, 00,000 to be received on 28/03/12. Spot rate of USDINR as on 01/11/11 is Rs. 50.00/- Exporters Risk: Rupee may appreciate export proceeds of USD 1, 00,000 will be converted at a rate lower than 50.00 Unprotected Transaction: As seen in the previous example, IF exporter is also not hedging his currency risk, his business fortunes are totally dependent on currency fluctuations and may have major impact on profit margins. Solution: In order to avoid these unforeseen situations, exporters also should buy INSURANCE (hedge their currency exposure on MCX-SX). Hedging Strategy: The Exporter has to sell Dollar as he will be getting remittances from abroad, but instead of selling dollar in the spot, he sells Dollar in MCX-SX Futures Contract. So on 01/11/11, Exporter will SELL 100 lots (1 lot = $1000) of MCX-SX USDINR 28/03/12 Future Contract say at Rs. 51/- On USD Receipt Day (28/03/12): Ex porter squares up (BUY) 100 lots of MCX-SX USDINR 28/03/12 Future Contract and simultaneously sell USD to INR on spot rate at Bank. Figure Scenario Example Scenario 1: On 28/03/12 Bank Spot Rate MCX-SX USDINR 28/03/12 Future Contract moved to 48.00, Exporter will gain Rs. 3/- (51-48 ) at MCX-SX, Since on 1/11/11, he has sold dollar in Futures Market at Rs. 51/- and on 28/03/12 rupee has appreciated to Rs. 48/-, hence he gains Rs. 3/-. But will lose Rs. 2/- (48-50) by converting USD to INR at bank at 48.00, Instead of 50.00. As If he had sold dollar on 1/11/11, he would have sold at Rs. 50/-, but now on 28/3/12, he is selling dollar at Rs. 48/- Scenario 2: On 28/03/12 Bank Spot Rate MCX-SX USDINR 28/03/12 Future Contract moved to 50.00, Exporter will gain Rs. 1/- (51-50) at MCX-SX, Since on 1/11/11, he has sold dollar in Futures Market at Rs. 51/- and on 28/03/12 rupee has appreciated to Rs. 50/-, hence he gains Rs. 1/- and exporter will convert USD to INR at bank @50.00, same as spot on 01/11/11 ( i.e. 50.00). Scenario 3: On 28/03/12 Bank Spot Rate MCX-SX USDINR 28/03/12 Future Contract moved to 52.00, Exporter will lose Rs. 1/- (51-52) at MCX-SX, Since on 1/11/11, he has sold dollar in Futures Market at Rs. 51/- and on 28/03/12 rupee has depreciated to Rs. 52/-, hence he lose Rs. 1/-. But will gain Rs. 2/- (52-50) by converting USD to INR at bank @52.00, Instead of 50.00. As If he had sold dollar on 1/11/11, he would have sold at Rs. 50/-, but now on 28/3/12, he is selling dollar at Rs. 52/- Observation: Overall he is gaining Re. 1/- in all scenarios and protecting his fixed margins. By hedging his position, the exporter is buying peace of mind. In times of extreme volatility he has safe-guarded his margins. Conclusion: Corporate can focus on their main business and minimize risks arising from currency fluctuations by buying INSURANCE i.e. hedging on currency futures platform (MCX-SX). Advantages of hedging through MCX Better Rates: While hedging through MCX, importers/exporters get better rates as compared to the rates obtained through banks. Counterparty Risk: If you hedge through bank, then there is counterparty risk. Counterparty risk implies that the bank might not honour the commitment it makes, if the bank itself goes into liquidation. However, in case of using MCX as a platform, it is guaranteed by the exchange. However, it has to be noted that the counterparty risk is extremely less in case of PSU banks and large private sector banks as they are in reasonably good shape. However, the level of trust that people place on smaller private sector banks and co-operative banks is much less and the perception of counterparty risk is much higher. Small Lot Size: The lot size in case of MCX contracts is quite less. The lot size for an MCX contract is only $1000 i.e. approximately Rs. 55000. The margin money that needs to be paid is approximately 3 per cent which works out to RS.1650. Thus, a person who is hedging can pay margin money of Rs. 1650 and have an exposure of Rs. 55000. Transparency: In case of a bank, the client does not know the difference between the bid and ask rates, whereas in case of MCX, the bid and ask rates are available on the screen. Hence, MCX offers much more transparency as compared to banks. Disadvantages of hedging through MCX Margin Money: It is the money that has to be deposited at the time of opening the account.eg. If a person wants an exposure of Rs 55000 he would have to deposit approximately Rs. 1650 as margin money. When a person hedges through banks, this margin money is not required to be paid. If the margin money deposited with broker is not much and the trade goes against the person, then more margin money is to be deposited. This results in unnecessary administrative work for the person who has hedged. Liquidity of long term contracts: The contracts up to 2 months in MCX are fairly liquid. However, the contracts after that are not very liquid. Not possible to hedge for long run: The maximum tenor for which you can hedge is 12 months as the maximum duration of a futures contract is 12 months. Here is a screenshot of MCX-SX market data watch Figure MCX Market Data Watch Factors affecting the exchange rate of Indian Rupee As we know that Forex market for Indian currency is hig hly volatile where one cannot forecast exchange rate easily, there is a mechanism which works behind the determination of exchange rate. One of the most important factors, which affect exchange rate, is demand and supply of domestic and foreign currency. There are some other factors also, which are having major impact on the exchange rate determination. After studying research reports on relationship between Rupee and Dollar of last four years we identified some factors, which have been segregated under four heads. These are: Market Situations Economic Factors Political Factors Special Factors 1. Market Situations: India follows the floating rate system for determining exchange rate. In this system market situation also is pivot for determining exchange rate. As we know that 90% of the Forex market is between the inter-bank transactions. So how the banks are taking the decision for settling out their different exposure in the domestic or foreign currency that is im pacting to the exchange rate. Apart from the banks, transactions of exporters and importers are having impact on this market. So in the day-to-day Forex market, on the basis of the bank and traders transactions the demand and supply of the currencies increase or decrease and that is deciding the exchange rate. On the basis of this study we found out the different types of the decisions, which is affecting to market. These are as follows: In India, there are big Public Sectors Units (PSUs) like ONGC, GAIL, IOC etc. all the foreign related transactions of these PSUs are settled through the State Bank of India. E.g. India is importing Petroleum from the other countries so payment is made through State Bank of India in the foreign currency. When State Bank of India (SBI) sells and buys the foreign currency then there will be noticeable movement in the rupee. If the SBI is going for purchasing the Dollar then Rupee will be depreciated against Dollar and vice versa. Foreign Institut ional Investors (FIIs) inflow and outflow of the currency is having the major impact on the currency. E.g. U.S. based company is investing their money through the Stock markets BSE or NSE so her inflows of the Dollars is increasing and when it is selling out their investments through these Stock markets then outflows of the Dollars are increasing. However if the FIIs inflowing the capital in the country then there will be the supply of the foreign currency increases and Demand for the Rupee will increases and that will resulted appreciation in the rupee and vice versa. Importer and Exporters trading is also affecting to the rupee. Like if an Indian exported material to U.S. so he will get his payments in Dollars and that will increase the supply of Dollars and increase of demand of rupee and that will appreciate the rupee and vice versa. Banks can be confronted different positions like oversold or over bought position in the foreign currency. So bank will try to eradicate thes e positions by selling or purchasing the foreign currency. So this will be increased or decreased demand and supply of the currency. And that will cause to appreciation or depreciation in the currency. As we know that in India there is a floating rate system. In India Central Bank (RBI) is always intervene in the trade for smoothen the market. And this RBI can achieve by selling foreign exchange and buying domestic currency. Thus, demand for domestic currency which, coupled with supply of foreign exchange, will maintain the price foreign currency at the desired level. Interventions can be defined as buying or selling of foreign currency by the central bank of a country with a view to maintaining the price of a given currency against another currency. US Dollar is the currency of intervention in India. 2. Economic Factors: In the Forex Market Economic factors of the country is playing the pivot role. Every country is depending on its prospect economy. If there will be change in any economy factors, which will directly or indirectly affected to Forex market. Here there are two types of economic factors. These are as follows: Internal Factors. External Factors. Internal Factors includes: Industrial Deficit of the country. Fiscal Deficit of the country. GDP and GNP of the country. Foreign Exchange Reserves. Inflation Rate of the Country. Agricultural growth and production. Different types of policies like EXIM Policy, Credit Policy of the country as well reforms undertaken in the yearly Budget. Infrastructure of the Country External Factors includes: Export trade and Import trade with the foreign country. Loan sanction by World Bank and IMF Relationship with the foreign country. Internationally OIL Price and Gold Price. Foreign Direct Investment, Portfolio Investment by the country. 3. Political Factors: In India election held every five years mean thereby one party has rule for the five years. But from the 1996 India was facing political instability and this type of political instability has created hefty problem in the different market especially in Forex market, which is highly volatile. In fact in the year 1999 due to political uncertainty in the BJP Government the rupee has depreciated by 30 paise in the month of April. So we can say that political can become important factor to determine foreign exchange in India. Due to political instability there can be possibility of de possibility delaying implementation of all policies and sanction of budget. So that will create also major impact on trade. 4. Special Factors: Till now we have seen the general factors, which will affect the Forex market in daily business. And on that factors the different players in the market have taken the decision. But some times some event happened in such a way that it will really change the whole scenario of the market so we can called that event special factors. However traders have t o really consider those things and take the decisions. We will see these types of factors in detailed: In the year 1998, when Government of India has done Pokhran Nuclear Test at that time rupee has been depreciated around 85 paise in day and 125 paise in seven days. Her main fear was that U.S., Australia and other countries have stop to sanctions the loans So this type of event will have major impact on the market. And due to this the decision procedure of the trader also varies. In the year 2000, India has faced Kargil war, which is also affected to the market. By this war the defence expenditures are raised and due to that there will be increase in the fiscal deficit. And become obstacle in the growth of the economy. So this type of event has impact on the Forex market. There are various measures taken by Reserve Bank of India which contributes to fluctuation in Indian Rupee against global currencies. Some factors are listed hereby: RBI Interest Rate Decision (Repo Ra te) The RBI Interest Rate Decision is announced by the Reserve Bank of India. If the bank is hawkish about the inflationary outlook of the economy and rises the interest rates, it is seen as positive, or bullish, for the INR, while a dovish outlook for the economy (or a rate cut) is seen as negative, or bearish, for the currency. Reserve Repo Rate The Reverse Repo Rate released by the Reserve Bank of India is the rate at which the RBI borrows money from commercial banks. The rate is another tool of monetary policy, with an increase leading to a transfer of funds to the RBI, and thus out of the banking system. A decline in the reverse repo rate is seen as positive (or bullish) for the Rupee while an increase is seen as negative (or bearish). Cash Reserve Ratio The Cash Reserve Ratio released by the Reserve Bank of India is the minimum reserves each commercial bank must hold against customer deposits. The rate is thought of as a tool of monetary policy, while indicating the strength in the economy. Generally speaking, a high reading is seen as positive (or bullish) for the Rupee, while a low reading is seen as negative (or Bearish). M3 Money Supply The M3 Money Supply released by the Reserve Bank of India measures all the India Rupees in circulation, encompassing notes and coins as well as money held in bank accounts. It is considered as an important indicator of inflation, as monetary expansion adds pressure to the exchange rates. An acceleration of the M3 money is considered as positive for the Rupee, whereas a decline is negative. Bank Loan Growth The Bank Loans released by Reserve Bank of India measures the amount of lending by the domestic financial system. A high reading is seen as positive (or bullish) for the Rupee, whereas a low reading is seen as negative (or bearish). FX Reserves, USD The FX Reserves released by the Reserve Bank of India presents changes in the value of official reserve assets reflecting purchases and sales (including swaps) of foreign exchange by the Central Bank, earnings on foreign securities, and transactions with official institutions overseas. A high reading is is seen as positive (or bullish) for the Rupee, while a low reading is seen as negative (or Bearish).