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Why are exchange Rates important to businesses_

Online money transfer in australia

eremitofficial
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Why are exchange Rates important to businesses_

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  1. . Why are exchange Rates important to businesses?

  2. International trade and businesses have been part of society from the time policies have been in favour of globalization. All business dealings, imports and exports, are dependent on the currency exchange rates when the money goes from one country to another in an international money transfer. Cross border businesses are highly affected by the frequent fluctuations in the currency exchange rates. Here are some of the reasons why exchange rates are important to businesses:

  3. Effect of Depreciation on Commercial Trade: A decrease in the value of the local currencies is always good news for exporting businesses as the decline causes high demand for their products in the global market. It can be twisted to their advantage by increasing the prices of their shipping to the same amount before depreciation while maintaining the same operating costs. ● The exact opposite situation will happen to the companies that focus on imports. With the depreciation of money, they have no choice but to increase their prices, which will have a negative impact on the local market, lowering the demand for their products.

  4. Impact of Appreciation on Trading Entities: In case of appreciation, the exporting companies will be badly affected because now their products are at higher prices. While the importing firms will be able to import raw materials at the best price. ● Indirect effects: In some cases, exchange rates do not directly affect exports or imports, but indirectly. For example, if the country imports fuel and the local currency depreciates, it will automatically increase travel costs - something that would affect the transfer of business goods. Again depreciation can be positive for some companies such as tourism, as the country will become a popular tourist destination. ●

  5. Fluctuations in exchange rates can have a significant impact on businesses, it could be profit and loss depending on the nature of the business. The exchange rate directly affects the import and export businesses, and both can prosper or lose according to the financial or inflationary pressures. Online money transfer in Australia is also dependent on the exchange rates and the demand for remittances also varies in relation to the money fluctuations.

  6. THANK YOU .

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