BUS 401 WK 2 SLP: International Financial Management

BUS 401 WK 2 SLP ASSIGNMENT: International financial management
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1] The currency of your country. Is it stable? Does your country have fixed or floating exchange rates? Does the exchange rate fluctuate a lot?
The U.S dollar ($) is a stable currency the major currency in the international market. Even though, there are other major currencies like the Euro, UK sterling pound, Japanese Yen and Swiss pound and, the US dollar is the unofficial currency for conducting internal business. There are other countries that use the US dollar through official dollarization. Despite volatility in the US stock markets since the 2008/2009 financial downturn and concerns about the Chinese economy, the dollar largely remains stable. Nonetheless there are concerns that the growing federal debt, volatility and credit challenges likely to put a strain on the dollar.
The U.S dollar follows a floating/ fluctuating exchange rate regime, where the market forces determine the currency value. The floating exchange rate system is preferred since the currency value reflects the market conditions (Agarwal, 2009). The US federal government and monetary policy institutions do not interfere with the exchange rate. As the unofficial currency of the world, the US currency does not have large fluctuating swings. Both the euro and sterling pound are stronger currencies, but the performance of the U.S economy has performed better in recent years compared to the euro region. As such, the dollar’s value is likely to be closer and even surpass that of the euro.
2] The banking system in your country. How safe is this system? Any recent banking crisis in your country?
The US banking industry suffered numerous challenges during the 2008/2009 financial crisis since some of the large banks held huge debts associated with the mortgage market. There have been increased regulations even for banks that were initially considered too big to fail. The need to protect consumers has meant that players in the banking and financial sector have to demonstrate that they are accountable to their consumers, while following the regulations of the Wall Street Reform. The bailout of Wall Street banks dented the image of the industry with customers concerned about the strength of banking. Nonetheless, the affected banks have since returned to profitability, and the banking industry still plays an important role in the U.S economy.
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