Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 words

extraneous Exchange Risk Analysis - Essay ExampleThe policies in china resulted in a winning market economy and indigenous private field. This resulted increase of foreign trade and inward investments. The high emergence recorded in China regarding economic activity and manufacturing, prompted m any(prenominal) companies to export to establish manufacturing units in China.1The supervene upon rate in the international market is dominated by US dollar. The imbalance in the formation can be considered as a reason for instability. The foreign counterchange policy by any state should have a long term agenda to hold it along with the increasing exports, which is a difficult thing. As per now the USD is international currentness and Euro and Yen are trying to replace it. For this mark the property should fulfill the classical money functions. This makes the countries equal china to have US currency up to some extent and this leads to appreciation of that currency resulting in incr easing the import costs. If any country wants to appreciate its currency, it must be accepted by lot of people and countries in the world. This increases demand for that particular currency and can be appreciated. 2The reason for the change in the foreign economic relations and exchange of Yuan with other currencies is due to opening of its economy to the outer world. The private foreign capital was use to increase the economic development. As China absorbed the new capitals, the currency was being appreciated. The increase of manufacturing sector simultaneously provided the foreign exchange to china to import the requirements. As it followed the self reliance the imports are unploughed at a limitation and this resulted in appreciation of its currency over the international currencies. As a result 1USD can fetch only 7 Yuan and this is due to the acceptance of the Yuan by different countries like the members of ASEAN and other countries. The self reliance and control of imports als o made Chinese currency appreciate gradually over USD in the course of time. As per Nike company is considered it can export its goods into china. wizard reason is that there are very less currencies like Yuan that are very cosy to the value of US. This makes the company to make more than profit in China than the countries like India, which have 1USD = more than 40 Indian rupees. So, instead of exporting the products to the countries like in India, it is better to export to country like China for Nike. Though it results in decrease of foreign investment, this resulted in healthy competition and growth of economy. 3From the hardened stand in 1949-50 the US policy has been liberalized from then on China. UK along with US raise China and both of them relied heavily on china. The policies of US and UK made china to implement the economic reforms. 4 After the end of Chinas Civil war both other parts of the world and China recognized the importance of China and the openness of the ec onomies. After Europe, Britain considered the China to be important according to American influence. come on of its large investments in the world, the British and Americans have substantial investments in China. China, which was ranked below Hong Kong and Malays by US in the preferential treatment emerged as the front runner in the economic refo