International business Essay Example | Topics and Well Written Essays - 500 words - 5

International channel - Es reckon ExampleIn fact, it is a rate at which currency of one country is transfer for a nonher. Generally, correspondences between currencies, ex commute rate reflect correspondence between ii national economies. That is why it is not surprising that switch rate is sometimes called a temperature of a national economy.Generally, there are two types of exchange rate regime mend exchange rates and floating exchange rates. According to the stiff exchange rate regime, monetary authorities set some limited exchange rate, which does not change because of the merchandise conditions. This opinion can be proved by the following words.A set wrong will be determined against a major world currency (usually the U.S. dollar, but also other(a) major currencies such as the euro, the yen or a basket of currencies). In order to book the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market in return for the currency t o which it is pegged (Currency Exchange Floating Rate Vs. Fixed Rate).Under the floating exchange rate regime, exchange rate of a particular currency is determined by the market forces. The exchange rate is set by relation between supply and demand for this currency. Central bank of a country cannot influence the market in order to affect the exchange rate.It is quite difficult to say which exchange rate is better. The final choice depends on the particular macroeconomic conditions, international conjuncture, instruments of macroeconomic policy, particular period of time, etc. Therefore, opinions of experts have been divided in this context. Generally diametrical periods in history were characterized with the different exchange rate regimes.Under the gold standard the currencies of all the countries were linked to gold. It was a period of the fixed exchange rate regime from 1870 to 1914. The regime was quite affective, but growing imbalances in international economy, overlook of stocks of gold have ruined the