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Foreign Exchange
There are price differences between the U.S. And UK sites for Toys 'r' Us. One example is the animated Talking Ben stuffed bear, which sells for $9.99 in the U.S. And £21.99 in the UK. The equivalent U.S. price in the UK should be £6.56, so there is a substantial price difference on this product.
Consumers do not, however, have the right to demand equal prices. Each nation represents its own market, so the economic conditions for each nation will be distinct. There are significant differences in the costs that underlie each product on retail shelves that are reflected in the retail price. Thus, the conditions for each market are different and the result will be different prices. Goods can flow across borders, but that does not imply that there is a global market -- each local market has its own conditions.
Furthermore, retail prices for consumer goods do not direct the supply and demand conditions of each market. The competitive situation of each market, and the relative buying power of each market...
There are also taxes, costs of doing business and other national factors that are worth considering. Further, prices are influenced by the price elasticity of demand in each market. Beyond that, firms often price in relation to competition within the market and where the product fits with that competition, rather than pricing strictly based on demand conditions. When an industry has a high degree of competition and price sensitive customers, prices will be lower. When there is little competition and low price sensitivity, prices can be significantly higher. Thus, in the U.S. The company might have to price a product with a low markup in order to be competitive with Wal-Mart or Amazon, so it does. If in the UK competitive pressures do not drive down the price of the product, markups can be quite a bit higher, and that is probably what has happened with products like the Talking Ben that are substantially more expensive in the UK than in the U.S.
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A currency crisis is the result of a sudden devaluation of…
Foreign Exchange Market of China The foreign exchange market is a financial market for trading currencies. The market is decentralized and there are financial centers around the world that operate as places of trade, where different types of buyers and sellers can trade the currencies. Ultimately, these trades directly influence how each currency is valued relative to the world market. The foreign exchange market involves international trade and investment which in
In addition, a series of joint ventures in which West German steel firms joined with East German firms and Krupp, Klockner, and Thyssen of Germany was pursuing other developmental initiatives in eastern Europe as well. Likewise, Arbed of Luxemburg was involved in steelmaking facilities in the former East Germany. According to Mangum et al., "The rising market for improved galvanizing for automobiles, appliances, canning, and other uses is producing
However, using a portfolio balanced channel, agents of the government balance their portfolios among domestic money and bonds as well as foreign currency and bonds. When economic conditions change, the portfolio is adjusted to a new equilibrium which in turn, influences the exchange rate. Agents can also view futures on exchange rates by looking at how certain countries are intervening in monetary policy. This method requires the reading of
Foreign Exchange Rates One of the major complaints companies and individuals have with foreign exchange rates and flexible exchange rates is that they are too volatile because they float. Several factors contribute to the volatility of the rate of exchange. These include the balance of trade, currency substitution, the differential speed of adjustment of asset markets vs. goods markets, and the news. The balance of trade affects the exchange rate because
In fact, modernly, most banks no longer attempt intervention in the marketplace at all. It can be argued, however that there is some value to remaining aware of currency exchanges. For example, determining some for of hedging for long-term purchase contracts can help businesses avoid season-related losses (Mizen, 2003). On the same note, however, it is just as simple for a business to require payment of the agreed upon
Foreign Exchange South Africa The currency in South Africa is the rand. The rand is a free floating currency meaning that there are few controls on the value of the currency. While the rand is a reference currency in the southern Africa region, it is not considered to be a "hard" currency. The performance of the rand against the USD in the past year is as follows: The chart shows the downward trajectory