How do exchange rates affect international transactions?

How do exchange rates affect international transactions?

Exchange rates determine how much one currency is worth in relation to another, impacting trade costs.

Can you give me an example of how a change in exchange rates affects a business?

Sure! If a US company imports goods from Europe and the Euro strengthens against the Dollar, the cost of those goods increases.

What strategies can businesses use to mitigate exchange rate risks?

Businesses can use hedging strategies, such as forward contracts, to lock in exchange rates and reduce uncertainty.

Are there specific industries that are more affected by exchange rate fluctuations?

Yes, industries like tourism, import/export, and manufacturing are particularly sensitive to exchange rate changes.

How often do exchange rates fluctuate?

Exchange rates can fluctuate frequently, even multiple times a day, due to market conditions and economic factors.