Question

Exchange rate effects on retail Industry (Walmart)

Using shifts in supply and demand curves, describe how a change in the exchange rate affected retail industry. Label the axes, and state the geographic, product, and time dimensions of the demand and supply curves you are drawing.

Explain what happened to industry price and quantity by making specific references to the

demand and supply curves. How can you profit from future shifts in the exchange rate?

How do you predict future changes in the exchange rate?

With references and at least more five hundred words. Thank you

Answer 1

Exchange rate -

Foreign exchange markets provide the facility of exchanging different currencies. The price of one currency in terms of another is known as the exchange rate. Exchange dealers do the job of the exchange of currencies. The demand and supply in the foreign exchange markets permit the establishment of the rate of one currency in terms of another. The transaction in the foreign exchange market can be either to exchange cash or to buy/sell some other instruments. The major instruments are currency forward, currency futures, currency options, and currency swaps

Using the details of oil refinery and the exchange rate the following things could be seen;

We can have profit from the future shifts in the exchange rates by arbitraging in the commodities and the currency market, however, the over the fluctuation of the price in the exchange rate can be predicted with the help of the current situation and the market behavior of the particular country and currency along with the segment like oil segment.

let's get the details with the help of diagram; where we have taken illustrative data to have a better understanding

Here if we check the below data then when there is a low exchange price then there is a higher demand for the oil barrels but as the price rises the overall demand for the oil declines fractionally, so the demand is purely is inverse relation to the change in the price in the exchange rate.

Here, we can predict the price based on the relation of the export country with the world and the relation with the country where they exporting, apart from the relations the prices are market-driven which are based on the market movement and the current inflation, and the demand of the product for the particular period is also a matter of concerns for the increase and decrease of the price with respect to the change in price and demand for the Oil and the value of exchange rate.

Such transactions are moreover affected when there is overall global tension going on with the countries which are engaged in major export business so the price of the oil rises when there are some major concerns with the countries and declines when there is everything is going well but having competitive market.

demand and supply curves -