International Financial Management: Currency Of Your County (Essay Sample)
In Modules 1 and 2 you looked at the cultural, legal, and political situation in your chosen country. Continue to do research on the country that you wrote about in Modules 1 and 2, but now do some research on the currency and banking situation in this country.
We normally think of currency and banking risks as being something confined to third world or developing countries. But events in the past few years such as the Euro crisis or the financial crisis in the United States have shown that not even wealthy, developed countries are without risks on the financial side. So it is important for any company doing business in your country to carefully consider the risks that they facesource..
The Currency of your County: Is it stable? Does your Country have Fixed or Floating Exchange Rates? Does the Exchange rate fluctuate a lot?
In Switzerland, the currency used is the Swiss Franc. The Swiss Franc is stable. The currency consistently gains value even when the markets are hit. Deutsche Bundesbank economists conducted a study between the March of the year 1986 to September 2012. In the study, they realized that the Swiss franc appeared to be stable irrespective of tough economic times. According to the study findings, the currency appreciated in times when world stock market index rates declined due to financial strains. Although the economists inferred the findings to other factors that determine the exchange rate, the case is that Swiss franc remained stable (Baltensperger, et.al., 2016).
In this period of “currency wars” the Switzerland had shifted from floating exchange rates, fixed exchange rates in the year 2011. In the year 2015, the Swiss National Bank again shifted from fixed exchange rates to floating exchange. The bank abandoned the minimum rate of exchange against the Euro – which was previously set at a fixed rate of 1.20. Thomas Jordan, the bank's chairperson said that the currency is floated so that its value is determined by the forces of the market demands and supply. The Swiss franc fluctuates at so much. It is however not surprising to the global stock exchange market since the currency just like any other adjusts to stay abreast with the market dynamics (Baltensperger, et.al., 2016).
The banking system in your country: How sa...
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