Skip to main content

Definition and explanation of foreign Exchange rate? What is Spot rate and hedging? Exchange rate effects on business?



Exchange rate =
It can be defined as the value of currency of one country comparing with the value of the currency of other country for the purpose of conversion between them.
Difference between foreign currency and exchange rate =
Foreign currency is that with which transaction is made within a country, every country has its own special currency which is used within a country by general public. However Exchange rate is that value of other country’s currency which can be measured with the value of our country which is also known as translation.
In simple words foreign currency is used within a country and to measure the value of other country’s currency in order to do business.
Foreign Exchange Market =
It is that market through which we can easily avail foreign currency. Anyone can easily get detail of the spot rate of foreign currency, exchange rate movements, profits and losses associated with the currencies of different countries of the world.
What is spot rate?
Spot rate is the rate of foreign currency of today’s date. That means the exchange rate which is available today.
Fluctuation in Exchange rates =
Everyone knows that not every day is the same day similarly Exchange rate fluctuates regularly it moves upward as well as downward according to the economic situation of the country. So many people in order to save them from loss uses different techniques which is somehow helpful.
Hedging
It is the process of minimizing risk of exchange rate losses by using forward exchange rates to deal with the changes come from the spot rate.


The following Five ways are used in order to prevent risk of Loss:
These steps are used according to the suitability of the businessmen and investors.
  1. One can open account in foreign country and deposit the currency of that country for future use.
  2. Or anyone can have required amount of foreign currency.
  3. Do business transactions with the foreign country when their currency value move downward which is sometime difficult to implement.
  4. One more way is that you can asked them to pay in your currency in order to avoid from exchange rate losses because of fluctuation.
  5. You can also request the businessmen to get payment later via agreement in order to avoid losses from exchange rate movement. 

Labels:

Comments

Post a Comment

Popular posts from this blog

Difference between Downsizing and Reengineering with real life example

Explain difference between Downsizing and Re-engineering with real life example? Downsizing = Downsizing is used to reduce the size in order to improve its financial performance, usually by laying off employees.Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people. Downsizing often takes place as part of a larger restructuring program at a company. Although it's usually thought of as a strategy companies use to become smaller, downsizing can also be the result of company mergers, acquisitions, and takeovers.Its most common form comes in employee layoffs, which reduce payroll costs for the company. Downsizing may also involve shuttering some operations or offering certain employees early retirement. Downsizing is typically seen during economic downturns in order to improve efficiency and
5 comments
Read more

Difference between strong and week culture

Difference between strong and week culture? Culture it is the knowledge of a particular group of people, defined by everything from language, religion etc Cultural strength may be measured across a sub-culture or across the country. Strong culture In strong culture, employees and management understand what is required of them and they will try to act in accordance with the core values. Weak culture In weak culture there is greater need for procedures, policies and bureaucracy in order to get things done in the desired way Difference: Strong culture Week Culture 1-Individual behaviors consistently reflect group values 1-provides poor services which needs to be improved through policies 2-it Produces clarity. 2-Individual behaviors reflect a diversity of beliefs and values 3-less need for detailed policies and procedures. 3-Produce inconsistency in practice. s
Post a Comment
Read more

How to Manage time to increase your focus.

The Most Successful person in the world is the one who value every second of their life That is why it is called Time is money. If you study history of the successful and rich people they all have one common and important habit which is time management. In time management you have to save time and utilize it in the right way in order to achieve your goals and this is the only thing which satisfy you and gives you the best return in the future. The Following tips will help you save and manage your time in order to increase your focus for achieving your most desired goals. Create a to do List. List all those tasks which you have to do and do it accordingly. Use Sticky Notes. Use sticky notes for important tasks which are urgent. Prioritize your tasks. Choose the most important tasks and set the priority tasks on the top of your list. Wake up Early in the morning. Waking up early have a big advantage as you can work in full peaceful environment with fresh mind.
2 comments
Read more