Question

Compare operations of foreign exchange markets to domestic markets. Explain how foreign exchange rates, economic conditions, and the international business environment affect prices charged in foreign markets. Support your analysis with a current news source, such as electronic local newspapers, New York Times, International Business Times, Economic Times, or CNN News.

Answer 1

Compare operations of foreign exchange markets to domestic markets:-

The foreign exchange market is also known as the FX market, and the forex market.

Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market.

The difference between the Domestic market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries.

What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.

Foreign exchange rates, economic conditions, and the international business environment affect prices charged in foreign markets.:-

Foreign exchange rates:-

A country's economic growth and financial stability impact its exchange rates. If the country has a strong, growing economy, then investors will buy its goods and services. They'll need more of its currency to do so. If the financial stability looks bad, they will be less willing to invest in that country. They want to be sure they will get paid back if they hold government bonds in that currency.

The money supply that's created by the country's central bank. If the government prints too much currency, then there's too much of it chasing too few goods. Currency holders will bid up the prices of goods and services. That creates inflation.  If way too much money is printed, it causes hyperinflation. That usually only happens when a country must pay off war debts. It's the most extreme type of inflation.

Economic conditions:-

The economic situation of your market impacts what you offer and how you present it to your target customers. For international marketing, the economics of the target market as well as the international economy affect your marketing strategy. The local economy influences how you approach consumers, while the international economic framework limits your ability to produce, ship and distribute your products through cost and regulatory constraints. An effective international marketing strategy takes both local and international economic conditions into account.

International business environment:-

When pricing for international markets, one has to take into consideration local culture, language, geography, climate, education, religion, attitudes and values. Firms need to examine carefully target market country’s characteristics and purchasing behaviours, to select an appropriate pricing strategy. but sometime it's affect in foreign exchange rate as such economy are not developed in india it's affect foreign currency rate.