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Foreign Currency Exchange

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  • Pages: 3
  • Word count: 670
  • Category: Change

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The foreign exchange rate is extremely significant In everyday life, even If you may not understand how or experience first hand. How much you give up of one currency to obtain another unit of currency Is called the foreign exchange rate. Chapter 3, exporting global business, shows how Important exporting and Importing goods from around the world Is and how It relys on the foreign currency exchange. A countries currency can be considered strong or weak and directly affect prices of Imports and exports affecting consumers all over the world.

When an exchange ate Is considered weak, that may cue an economic recession versus when an exchange rate is considered strong, showing a countries rlslng economy. If a country imports more then they export, they have what they call a trade deficit. In part 1 of chapter 3, Daniel T. Griswold, associate director of the Center for Trade Policy at the Cato Institute stated, “The trade deficit is not a sign of economic distress, but rising domestic demand and investment.

Imposing new trade barriers will only make Americans worse off while leaving the trade deficit virtually unchanged” It is important for businesses to understand how to convert one currency to nother and know the up to date foreign exchange rate. Because shifting exchange rates affect costs of imported and exported goods and services, it can directly affect the profitability of a business. There are many websites available on the internet to help anyone with converting currency.

One must first find out the up to date foreign exchange rate on sites such as usforex. com or x-trade. com. Many foreign exchange rates are constantly changing and determined by the market forces of supply and demand. Some countries use a held exchange rate that is set by the government and does not fluctuate day to day. Chapter 3 also explains that nations can increase or decrease the value of its money, called currency devaluation.

An example of a changing currency that is prevalent in the United States is the mexican peso MXN. First, you would need to figure out how many peso you desire and multiply that number by the US $ dollar exchange rate. If you need 23 peso’s and 1 peso = $. 082 than you have $1. 886. The exchange fluctuates so It Is Important to find the most up to date exchange rate, although for quick reference, generally there are 10-15 peso’s for every US $.

You can do the math yourself or you can use the many tools on the Internet that help you quickly figure out how to convert different currency exchanges. Banks can also help you figure out up to date foreign currency exchange rates. If I had a business with a currency exchange payroll, I would most definitely hire a company that specializes In International payroll, such as FIT Global. They provide international payroll services and have the capability to convert foreign currency payrolls to domestic currency and vice versa.

The reason I would chose help through a professional company is because there are many rules, regulations and changing xchange rates to follow. The united States Fair Labor Standards Act (FLSA) states wage level while working within the United States. An employer can be questioned and investigated if they are not paying workers, due to foreign exchange rate, at the correct minimum wage pay level. It is always beneficial to seek expert opinions and professional help in an area that can require intensive training and can change daily.

With the foreign currency exchange rate affecting every global consumer in ways we see on a day to day basis and in ways we don’t see first hand. It affects how nternational workers are paid, it affects the value of the dollar (or whatever currency is your home town currency) and it affects the prices of our countries importing and exporting. The foreign currency exchange is Just as important on a global set as it is in a locally setting. It affects everyone’s day to day life with every day to day purchases.

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