International trade and foreign exchange market

1.

International Trade and
F oreign E xchange
Market
Welcome to our presentation on international trade and the foreign
exchange market. Today, we'll be discussing the importance of trade and
the different structures and components that make it up.
by Ruveida Atam

2.

Types of International Trade
Import/Export
Tourism
Cultural exchange
Goods and services are
People travelling to other
Exchange of art, music, and
brought into and out of a
countries for vacation,
other cultural activities
country.
business or medical purposes.
between countries.
Foreign Direct
Investment
Investment in foreign countries
by foreign entities in the form
of companies and factories.

3.

Components of International Trade
Commodities
Manufactured Goods
Raw materials and natural resources such as
Products that have been transformed such as
oil, minerals, and agricultural products.
cars, computers, and textiles.
Capital Goods
Services
Tools and machinery used to produce other
Intangible activities such as transportation,
goods.
tourism, and financial services.

4.

Balance of Payments
1
Current Account
Records the flow of goods and services in and out of the country.
2
Capital Account
Records the flow of money and investment in and out of the country.
3
Financial Account
Records the purchase and sale of assets, including investments and loans.

5.

Government Intervention
Tariffs
Subsidies
Import Quotas
Taxes on imported goods to
Financial assistance given to
Limitations imposed on the
protect domestic industries
domestic industries to compete
quantity of goods that can be
from foreign competition.
against foreign companies.
imported into a country.

6.

E xchange Rate Systems
1
F loating
The exchange rate is determined by
F ixed
2
the supply and demand of the foreign
exchange market.
The exchange rate is set and
maintained by the government or
central bank.
3
Managed F loat
The exchange rate is allowed to
fluctuate within a range set by the
government or central bank.

7.

Benefits and Challenges
1
Benefits
2
Challenges
Increase in competition and innovation,
Trade imbalances, job displacement,
access to larger markets, and greater
reduced autonomy, cultural
efficiency in resource allocation.
homogenization, and environmental
degradation.

8.

E xchange Rates and Macroeconomics
Rising E xchange Rate
F alling E xchange Rate
Increase in purchasing power of foreign
Decrease in purchasing power of foreign
currency, lower inflation, and cheaper imports.
currency, higher inflation, and more expensive
imports.