Foreign Exchange and International Finance

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Presentation transcript:

Foreign Exchange and International Finance CHAPTER 7 11/19/2018 CHAPTER 7 Foreign Exchange and International Finance 7-1 Money Systems Around the World 7-2 Foreign Exchange And Currency Controls 7-3 Currency Transactions Between Nations INTERNATIONAL BUSINESS

LESSON 7-1 Money Systems Around the World GOALS Explain the role of money and currency systems in international business. Identify factors that affect the value of currency.

Money and Currency Systems 7 Money and Currency Systems What is money? Acceptability Scarcity Durability Divisibility Portability Why is money used? Medium of exchange Measure of value Store of value

Foreign Exchange 7 Balance of payments Economic conditions Money supply and demand Risk Inflation Political Stability

LESSON 7-2 Foreign Exchange and Currency Controls GOALS Discuss foreign exchange activities. Describe the main activities of the World Bank and the International Monetary Fund.

Foreign Exchange Activities 7 Foreign Exchange Activities Changing exchange rates The foreign exchange market Foreign exchange controls

Japanese Yen Per U.S. Dollar 7 Japanese Yen Per U.S. Dollar

International Financial Agencies 7 International Financial Agencies The World Bank International Monetary Fund (IMF) Analyze economic situations Suggest economic policies Provide loans

LESSON 7-3 Currency Transactions Between Nations GOALS Discuss payment methods and financial sources for international business transactions. Explain other payment methods and financial documents used in international trade.

International Financial Transactions 7 International Financial Transactions Foreign trade payment methods Cash in advance Letter of credit Sale on account Sources of international financing Short-term financing Long-term financing

Other Payment Methods and Financial Documents 7 Other Payment Methods and Financial Documents Promissory note Bill of exchange Electronic funds transfer (EFT) Commercial invoice Insurance certificate

7 A Commercial Invoice