GEB 3375 Chapter Notes - Chapter 11: Floating Exchange Rate, Devaluation, Herding
Document Summary
International business transactions take place within the global monetary and financial systems. Fluctuating exchange rates are an important challenge for international managers. Monetary and financial activities of firms and nations have intensified. A currency is a form of money and a unit of exchange. Exchange rate: the price of one currency expressed in terms of another; the number of units of one currency that can be exchanged for another. Links national currencies so that buyers and sellers can make international price and cost comparisons. Exchange rates create currency risk - the potential harm that arises from changes in the price of one currency relative to another. Exporters and importers are more concerned about the losses that arise from currency fluctuations. Convertible currency- can be readily exchanged for other currencies. Most readily convertible are called hard currencies. Strong stable currencies that are universally accepted. British pound, canadian dollar, euro, japanese yen, and us dollar.
