HI5014 International Business Across Borders
Foreign currency & exchange influences
* The conversion of one currency into another currency and foreign currency also refers the global market where currencies are traded.
* Exchange rate plays a vital role in trade. Exchange rate is the one of most important element for economic health of countries such as interest rate and inflation.
* Exchange rate also affects one nation’s trading relationship with other nations.
* If a country has high currency then that country exports more expensive but imports cheaper in foreign markets. And if a country has low currency then that country exports cheaper but imports more ...view middle of the document...
Foreign investors stop investing funds because of financial trouble. In Colombia, Government debt to GDP percentage is 38 in 2014.
* Term of trade
If Colombia increases export not import than term of trade has favourably improved and value of currency increases.
* Political stability and economic performance
Colombia’s economic fundamentals, including macroeconomic stability and openness to global trade and finance, relatively remain strong. The economy has expanded by an average of around 5% annually over the past five years. Colombia recently focused on improving regulation and fostering a stronger private sector.
Colombia has Economic Freedom Score in 2016: 70.8 (down 0.9 point)
Economic Freedom Status: Mostly Free
Global Ranking: 33rd
* Current account deficits/ Balance of Payment
A country is importing goods and services more than exporting. In Colombia import is 3.52 USD billion and export is 2.30 USD billion so balance of trade is -1.68 USD billion in 2016. Colombia recorded a Current Account deficit of 4343 USD Million in the fourth quarter of 2015. We can say that Colombia's currency depreciates in value. Foreign investor loses confidence and removes their investment.
If Colombia has recession then interest rate goes down and foreign capital also decreases.
If currency value rises in country, investors will demand this currency to make a profit in the future. With increase in demand comes rise in value of currency and exchange rate.
These all factor determine fluctuation the foreign exchange rate.
The countries existing trade barriers and incentives
Sometime countries complain about trade because too much trade cause workers to lose jobs that is the reason countries make a limit trade by creating trade barriers. Barriers can be tariff and non-tariff.
Call Centre will face these barriers and incentives
The telecommunications, media and digital (TMD) industry has a proven history of strong attractive returns and growth in emerging markets.