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International Business Environment Sybba (Sem 4) : Division - 4

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138 views13 pages

International Business Environment Sybba (Sem 4) : Division - 4

Uploaded by

prahar08
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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D.R PATEL & R.B.PATEL COMMERCE COLLEGE & P.

G CENTER
AND BHANIBEN CHHIMKABHAI PATEL BBA COLLEGE .​
​

INTERNATIONAL BUSINESS
ENVIRONMENT​
SYBBA ( SEM 4 )​
DIVISION – 4 ​

PREPARED BY – RATHOD PRAHAR MAHENDRAKUMAR (2452)​

PRESENTED TO – PROF. ARSHAN BHATHENA ​


TOPIC
EXCHANGE RATE POLICY
AND EXCHANGE CONTROLS
INTRODUCTION
TO THE PROJECT
Definition of Exchange Rate Policy:​
Exchange rate policy refers to the actions
and strategies implemented by a government
or central bank to manage and influence the
value of its currency relative to other
currencies in the foreign exchange market.​

Overview of Exchange Controls:​


Exchange controls are government-imposed
restrictions on the movement of capital and
exchange of currencies, aimed at regulating
the flow of funds in and out of a country's
economy.​
IMPORTANCE OF
EXCHANGE
RATES​
1. Facilitating International Trade and Finance:​
Exchange rates play a crucial role in facilitating
international trade by determining the prices of
exported and imported goods and services.​
2. Attracting Foreign Investment:​
Stable exchange rates can attract foreign
investment by providing certainty and reducing
currency risk for investors.​
3. Maintaining Competitiveness:​
Exchange rate policies impact a country's
competitiveness in the global market by
affecting the prices of exports and imports.
TYPES OF EXCHANGE
RATES ​

1. Fixed Exchange Rate 2. Floating Exchange Rate 3. Managed Exchange Rate


System:​ System:​ System: ​
Definition: A system in Definition: A system in Definition: A system in
which a country's currency which exchange rates are which governments or
is pegged to the value of determined by market central banks intervene in
another currency or a forces of supply and the foreign exchange
basket of currencies.​ demand.​ market to influence the
Examples: Gold Standard, Examples: Managed Float, exchange rate within a
Bretton Woods System.​ Free Float.​ certain range. ​
​ Examples: Dirty Float,
Crawling Peg.​
​
OVERVIEW OF
EXCHANGE
CONTROLS​
1. Import and Export Restrictions:
Tariffs, quotas, and other trade barriers to
regulate the flow of goods and services.
2. Capital Controls:
Restrictions on the movement of capital
across borders to maintain financial
stability.
3. Exchange Restrictions:
Regulations on currency exchange
transactions to manage exchange rate
volatility.
IMPORTANCE
OF EXCHANGE
RATES​
1. Economic Factors:​
Inflation rates, interest rates,
balance of payments, and
economic growth.​
2. Political Factors:​
Government policies, political
stability, and international
relations.​
3. Market Sentiment:​
Speculation, investor
confidence, and market
expectations.
FACTORS
INFLUENCING
EXCHANGE RATE
POLICY​
1. Economic Factors:​
Inflation rates, interest rates, balance
of payments, and economic growth.​
2. Political Factors:​
Government policies, political
stability, and international relations.​
3. Market Sentiment:​
Speculation, investor confidence, and
market expectations.
PURPOSE OF EXCHANGE
CONTROLS​
1. Maintaining Monetary Stability:
Exchange controls can help stabilize the domestic currency and prevent
excessive fluctuations in exchange rates.
2. Protecting Domestic Industries:
Import restrictions and tariffs can protect domestic industries from
foreign competition and support local production.
3. Safeguarding Foreign Reserves:
Capital controls can help preserve foreign exchange reserves and prevent
depletion during times of economic uncertainty or crisis.
CRITICISMS AND
CHALLENGES
1. Accusations of Currency Manipulation:
Some countries face criticism for manipulating their currencies for trade
advantages.
2. Ineffectiveness in Achieving Policy Objectives:
Exchange rate policies may not always achieve their intended goals due to
various factors.
3. Impact on Global Economic Stability:
Exchange rate policies and controls can contribute to global economic
imbalances and instability.
IMPACT ON
ECONOMY
1. Effects of Exchange Rate Policy:
Trade balance, economic growth,
inflation, employment, and investment.​
2. Consequences of Exchange Controls:​
Trade distortion, capital flight, economic
inefficiency, and reduced foreign
investment.​
CONCLUSIONS
1. Summary of Key Points:​
Exchange rate policy and controls are crucial tools for
managing economies and ensuring stability.​
2. Emphasis on Balanced Approaches:​
The importance of balancing policy objectives with the
need for flexibility and responsiveness.​
3. Call to Action:​
Encouragement for policymakers to carefully consider the
implications of their exchange rate decisions.​
THANK YOU

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