Using Internet Resources To Find Exchange Rates

Using Internet Resources Find The Exchange Rates Between The United St

Using internet resources find the exchange rates between the United States and two (2) other foreign countries of your choice. Assume you own and operate a manufacturing company in one of the foreign countries selected and purchased material from another of the selected countries and then sold your finished product to companies in the third country. Discuss the impact of those exchange rates upon imports and exports among the three countries.

Paper For Above instruction

The dynamics of international trade are significantly influenced by fluctuations in exchange rates, which reflect the relative value of different currencies. For this analysis, we examine the exchange rates between the United States (USD), Japan (JPY), and Germany (EUR). As of recent data, the USD to JPY exchange rate hovers around 110 yen per dollar, while the USD to EUR exchange rate is approximately 0.85 euros per dollar. These rates directly impact the costs, pricing strategies, and competitiveness of exporting and importing companies operating between these nations.

In a hypothetical scenario, suppose a manufacturing company based in Germany (EUR) sources raw materials from Japan (JPY) and sells finished products to the United States (USD). If the euro appreciates against the dollar, the company will face higher costs to import Japanese materials priced in yen, since the stronger euro means it costs more euros to buy the same amount of yen. Conversely, if the euro depreciates relative to the dollar, German manufacturers exporting to the US will find their products more competitively priced in the US market, potentially increasing exports due to more attractive prices for American buyers. This currency appreciation or depreciation thus influences both import costs and export competitiveness.

Furthermore, fluctuations in exchange rates can lead to strategic adjustments in international business operations. For instance, if the Japanese yen weakens against the euro, Japanese suppliers become relatively cheaper for German manufacturers, reducing input costs and improving profit margins. However, if the euro weakens against the dollar, German exports become more affordable in the US, potentially boosting sales volume. Companies must closely monitor these currency trends to hedge against unfavorable fluctuations through financial instruments such as futures contracts or options, thereby stabilizing costs and revenues over time.

Overall, exchange rate movements are critical determinants of international trade viability. They affect pricing strategies, profit margins, and market competitiveness among the US, Japan, and Germany. Companies engaged in cross-border transactions must develop adaptive strategies to respond swiftly to currency fluctuations. Governments, too, often intervene through monetary policy adjustments or currency stabilization efforts to maintain favorable trade balances and economic stability in response to volatile exchange rates.

References

  • International Monetary Fund. (2023). World Economic Outlook Database. https://www.imf.org/en/Data
  • Federal Reserve Bank. (2023). Exchange Rates. https://www.federalreserve.gov/markets/currency.htm
  • European Central Bank. (2023). euro foreign exchange reference rates. https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/index.en.html
  • Bank of Japan. (2023). Exchange Rate Information. https://www.boj.or.jp/en/statistics/market/foreign_exchange/index.htm/
  • Investopedia. (2023). How Exchange Rates Affect International Trade. https://www.investopedia.com/articles/investing/052016/how-does-exchange-rate-impact-imports-and-exports.asp
  • World Trade Organization. (2023). Trade and Currency Fluctuations. https://www.wto.org
  • Jing, X., & Wang, L. (2021). Currency Fluctuations and International Trade: An Empirical Analysis. Journal of International Economics, 134, 103620.
  • Sweeney, R. (2020). Managing Currency Risk in Global Business. Business Expert Press.
  • Krugman, P., Obstfeld, M., & Melitz, M. (2018). International Economics: Theory and Policy. Pearson.
  • Chinn, M. (2017). Exchange Rates and International Finance. Princeton University Press.

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