International BusinessChapter “6” Overview

Presented

by

Jerry Miles

International Business• Fluctuating Currency Values

• Foreign Exchange Quotations

• Exchange Rate Risk

• Currency Exchange Control

• Balance of Payments

• Tariffs, Customs or Import Duties

• Accounting Practices

• Debt

International Business

• Foreign Exchange quotations– use US$– Forward Rates for Hard currencies– Premium vs. Discounted trades

• Spot Rate– Exchange between two currencies which must

deliver within two days

• Forward Rate– 30, 60, 90 or 180 days

International Business• Government Controls

– Limited Legal use of currency– Government sets value of currency regardless

of market– Government must approve foreign currency

purchases– Retains Currency within country

International Business

• Governments watch BOP as they go into deficit and take action to control deficit

• International Business Management Must always be awair of actions which may devalue currency or deflate economy

• Accounting Practices– Variation by country– Translation risk

International Business

• Debt– Our debt is in Government and Corporate

Bonds– LDC debt used to meet Loan payments

• US debt is only 6% of GNP

• US foreign debt is in US$