The Relevance of Stakeholder Management in International Business Context

International Business

Why Business Models Matter in Business?

Modern Management Concepts

What is Corporate Philanthropy?

Business Ethics

Stakeholder, Dynamic Capabilities and Sustainable Development Approaches to Strategic Management

Strategic Management

Importance of Innovation Strategies in Organizations

Modern Management Concepts

Introduction to International Trade Finance

Financing international trade is a complex process, involving many variables, ranging from corporate policy and marketing strategy to exchange risk and general borrowing conditions. The reason behind the complexity of financing international trade is that trade involves two countries with different currencies and jurisdictions. In addition, payments must be made at a distance and across time, so the exporter, the importer, or both need credit during part or all of the period form the initial manufacture of goods by the exporting firm to the time of the final sale and collection by the importer. The main objective of a good corporate export financing policy should be financing the greatest possible amount of sales with the greatest possible management simplicity and Continue reading

Abey Francis

Interest Rate Parity (IRP) Theory of Exchange Rate

When Purchasing Power Parity (PPP) Theory applies to product markets,  Interest Rate Parity (IRP) condition applies to financial markets.  Interest Rate Parity (IRP) theory postulates that the forward rate differential in the exchange rate of two currencies would equal the interest rate differential between the two countries. Thus it holds that the forward premium or discount for one currency relative to another should be equal to the ratio of nominal interest rate on securities of equal risk (and duration) denominated in two currencies. For example, where the interest rate in India and US are respectively 10% and 6% and the dollar-rupees spot exchange rate is Rs.42.50/US $. The 90 day forward exchange rate would be calculated as per IRP as Continue reading

Abey Francis

International Fisher Effect

According to the Relative Version of  Purchasing Power Parity Theory (PPP) one of the factors leading to change in exchange rate between currencies is inflation in the respective countries. As long as the inflation rate in the two countries remains equal, the exchange rate between the currencies would not be affected. When a difference or deviation arises in the inflation levels of the two countries, the exchange rate would be adjusted to reflect the inflation rate differential between the countries. The International Fisher Effect (IFE) theory is an important concept in the fields of economics and finance that links interest rates, inflation and exchange rates. Similar to the Purchasing Power Parity (PPP) theory, IFE attributes changes in exchange rate to Continue reading

Abey Francis

Factors Affecting the Forex Market

The exchange value of a currency, or the rate of exchange, fluctuates with changes in demand and supply. The factors which affect the demand for and the supply of a currency are many and varied. There are some factors which operate in the short period and have influence on day-to-day- fluctuations in rates of exchange. The commercial and financial relationship between trading countries is now extensive and payments on various accounts fall, due for early settlement. These payments constitute the short-term demand and supply in regard to currencies. There are, however, changes in currency and credit conditions and political and industrial conditions which have their influence on exchange rates only in the long period. The factors affecting Forex market may Continue reading

Pages: 1 2
Abey Francis

Use of Forex Futures

Forex  futures are  futures markets  where the underlying commodity is a foreign currency. Foreign currency futures are essentially the same as all other futures markets (index and commodity futures markets), and are  traded  in exactly the same way.  Forex  futures markets trade futures contracts that reflect the exchange rates of two currencies. For example, the most popular currency futures market is the  EUR  futures market, which is based upon the Euro to US Dollar exchange rate. Hedging with Forex Futures Tenders make use of the market for forex futures/foreign currency futures in order to hedge their foreign exchange risk. For instance suppose a US importer importing goods from India for 1 million Rupees and he needs this amount for making Continue reading

Abey Francis

Forward Foreign Exchange Contracts

Forward exchange is a device to protect traders against risk arising out of fluctuations in exchange rates. A trader, who has to make or receive payment in foreign currency at the end of a given period, may find at the time of payment or receipt that the foreign currency has appreciated or depreciated. If the currency moves down or gets depreciated the trader will be at a loss as he will get lesser units of home currency for a given amount of foreign currency, which he was holding. Similarly, an importer, who was contracted to make payment of a given amount in dollar at the end of a given period, may find that at the time of payment, the rupee Continue reading

Abey Francis
Exit mobile version