The head of sales wants to discuss potential sales in international markets. The sales vice president has estimates of the number of units that could be sold in various international markets. However, he is not sure how they would be priced in local currency and what determines the value of currencies in foreign markets.
I need to compose a memo on foreign exchange rate determination. Specifically, he wants you to articulate the factors that determine the value of foreign currency and how/why currencies move as they do.© BrainMass Inc. brainmass.com October 24, 2018, 8:16 pm ad1c9bdddf
Exchange rates constantly fluctuate or move and value of a currency continuously changes. The value or rate of foreign exchange is not always the same as it is prone to constant fluctuation depending on how the world economy is moving. The value of a certain currency increases depending on the actual demand for such currency. The more demand for a specific currency, the higher rates it will command. A currency that has been devalued or has a probably chance of being devalued will not be actively traded. A country's political or economic crisis can cause the devaluation of its currency.
In foreign exchange, the price of a currency pair is the market's expectations (at that time) of the value of that currency measured against another currency given the current and expected economic and political situation in the two economies.If, for example, an economy's ...
I need to compose a memo on foreign exchange rate determination.
Global Foreign-Exchange Markets/ The Determination of Exchange Rates
1. As a CFO of a company that exports to Europe, the company has received a contract to supply components to a German manufacturer. What are various approaches available to help accurately forecast the exchange rates? What are some implications of exchange-rate changes on the company's marketing, production, and financial decisions?
2. Perform an online search for an article on the International Monetary Fund (IMF). Read the article, and think about how the topic relates to the concepts "The Determination of Exchange Rates".
Write a brief summary report (1 page), and discuss how the article relates to the IMF's position of influence on individual nation's economic policy.