The International Financial System
United States companies invest internationally in an effort to enhance their businesses. This investing can make the form of portfolio investments or foreign direct investments. Portfolio investments are investments in paper or financial assets such as in storks and bonds, foreign direct investments are investments in physical assets, such as a production plant or other real estate. Doing business in international markets you must take into account the foreign exchange implications upon their ability to price their goods in foreign markets.
The internatinoal monetary system consists of the overall value of currencies that float against one another in the marketplace.. Over the years, weve had a lot of reports on the value of the dollar, the value of the euro, the value of the yen. All three of these currencies have been frequently referred to as “international trading currencies”. Of course, the dollar has been the favorite of interntional investing from the end of world War II at least until the last , maybe 15 or 20 years.
The international monetary system includes things like the INternational Monetary Fund, various international banking concortiums, the World Bank. All of those institutions do have a profound effect upon international monetary exchange rates and the international monetary system.
The exchange rate chart can be used for making better ecisions, either as consumers or business professionals. There are several types of decisions which includes; routine buy and sell ttansactions, lending money, borowing money, and investing in another country. Consumers or businesses thinking of investing in another country must take exchange rates into account as they assess the likely return they will get on the investment. Overall, the international monetary system tends to work fairly well. Its not without its volatility, but it is one that does tend to do a falrly decent job of regulating the flow of wealth, if you