Introduction
Purpose and Scope
The purpose of this report is to analyze the affect of exchange rates on businesses. This report covers the issues for every day.
Methods
The information used in this report comes from websites from business reports on the issue. These are referenced in the text using footnotes. There is a bibliography at the end of this report.
Imports and Exports
When doing business transactions between two countries the international exchange rate is calculated by the currency of one country relative to the other country. If a countries Gross Domestic Product (GDP) is increased then the Net Export will be positive but when countries GDP is decreased then the Net Export will be negative. During business transactions, if …show more content…
This is because if they source their raw materials from a European country and have European employees then they will have to pay them in Euros but if they have a large presence over seas and have mostly American employees then they can pay them in American dollars. Their profits will increase because they will be receiving their payments in Euros but will be dealing with everything else in dollars so the amount of profits and equity will be increased. The same goes for European countries if they do the exact same. However, individuals, investors and business owners can take steps to mitigate risks and take advantage of such currency movements.
Exchange Rate Regulations
The exchange-rate system has a set of rules that are established to govern the currency value from nation to nation. All nations must follow these sets of rules set up by nations so that the exchange market is conducted properly. These fixed factors that impact currency exchange rates are generally identified as inflation, interest rates, and trade value. As businesses deal with transactions with other countries they must exchange their currency to the country they are doing business transactions with unless that company deals with multiple countries currency.
Conclusions
The affects that the exchange rate has on businesses have a great impact that also affects the nations Gross Domestic Product. The exchange rate is also affected by these factors:
• Relative rates of
Purpose and Scope
The purpose of this report is to analyze the affect of exchange rates on businesses. This report covers the issues for every day.
Methods
The information used in this report comes from websites from business reports on the issue. These are referenced in the text using footnotes. There is a bibliography at the end of this report.
Imports and Exports
When doing business transactions between two countries the international exchange rate is calculated by the currency of one country relative to the other country. If a countries Gross Domestic Product (GDP) is increased then the Net Export will be positive but when countries GDP is decreased then the Net Export will be negative. During business transactions, if …show more content…
This is because if they source their raw materials from a European country and have European employees then they will have to pay them in Euros but if they have a large presence over seas and have mostly American employees then they can pay them in American dollars. Their profits will increase because they will be receiving their payments in Euros but will be dealing with everything else in dollars so the amount of profits and equity will be increased. The same goes for European countries if they do the exact same. However, individuals, investors and business owners can take steps to mitigate risks and take advantage of such currency movements.
Exchange Rate Regulations
The exchange-rate system has a set of rules that are established to govern the currency value from nation to nation. All nations must follow these sets of rules set up by nations so that the exchange market is conducted properly. These fixed factors that impact currency exchange rates are generally identified as inflation, interest rates, and trade value. As businesses deal with transactions with other countries they must exchange their currency to the country they are doing business transactions with unless that company deals with multiple countries currency.
Conclusions
The affects that the exchange rate has on businesses have a great impact that also affects the nations Gross Domestic Product. The exchange rate is also affected by these factors:
• Relative rates of