Doing business at home is not the same as doing business in foreign countries. There are different elements which should be understand by a manager who needs to conduct a business on international level. Some of them are the monetary system on the international level, the global market of capital and the strategies to develop in international business. During this fifth unity, I was equipped by these elements and improved my knowledge about how I can face an international business responsibilities.
Since each country has its currency and there are necessities to exchange goods and services, it is important to establish a compromise about how the exchange rates of currencies will stands. So the international monetary system allows to establish …show more content…
The role of the World Bank is to promote the economic development in the world, while that of the IMF was the maintain order in the international monetary system. Therefore IMF should ensure that the exchange rate system developed by each country does not harm the international monetary system. Notice that some countries adopt a floating exchange rate system, where the foreign exchange market determine the value of their currency. Though, other countries adopt a fixed exchange rate system where they determine the value of their currencies in an agreement with other …show more content…
There are different risks associated with the globalization of capital markets. First the deregulation of market reduces the control of capital flow in and out the country. Also, it increases the speculation of capital flow which can produce a disinformation and can influence negatively investors.
Motivated by the need to increase their profit, investors and borrowers recur to Eurocurrency. Eurocurrency is all currencies banked in a foreign. Since the Eurocurrency is not subject to any country’s regulation, it has a higher interest rate for investors and a low cost for borrowers. However, Eurocurrency has inconvenient too. It has a high risk of loss of deposits due to the banks failure and the risk of foreign exchange risk.
Foreign exchange risks affect the cost of capital by its speculation which can increase or decrease the value of capital borrowed or invested in a foreign currency. So manager should develop a good strategy to face the risks of global
Since each country has its currency and there are necessities to exchange goods and services, it is important to establish a compromise about how the exchange rates of currencies will stands. So the international monetary system allows to establish …show more content…
The role of the World Bank is to promote the economic development in the world, while that of the IMF was the maintain order in the international monetary system. Therefore IMF should ensure that the exchange rate system developed by each country does not harm the international monetary system. Notice that some countries adopt a floating exchange rate system, where the foreign exchange market determine the value of their currency. Though, other countries adopt a fixed exchange rate system where they determine the value of their currencies in an agreement with other …show more content…
There are different risks associated with the globalization of capital markets. First the deregulation of market reduces the control of capital flow in and out the country. Also, it increases the speculation of capital flow which can produce a disinformation and can influence negatively investors.
Motivated by the need to increase their profit, investors and borrowers recur to Eurocurrency. Eurocurrency is all currencies banked in a foreign. Since the Eurocurrency is not subject to any country’s regulation, it has a higher interest rate for investors and a low cost for borrowers. However, Eurocurrency has inconvenient too. It has a high risk of loss of deposits due to the banks failure and the risk of foreign exchange risk.
Foreign exchange risks affect the cost of capital by its speculation which can increase or decrease the value of capital borrowed or invested in a foreign currency. So manager should develop a good strategy to face the risks of global