Wednesday, December 1, 2010

Remember Import Export Exchange Rates When You're Planning Your Business Activities

If you’ve had your own business in a domestic market for some time, you may be thinking of expanding into the international market. This is an exciting time in any business and a time to look at numerous factors, including things like import export exchange rates. Understanding import export exchange rates will allow you to profit at times where others will fail, and it’s important you work effectively and understand the implications of changes in these rates.

Firstly, going international will help you make more profits by increasing your production runs, and as such you can reduce the overall cost per unit. Branching into global markets can be the real silver bullet for many companies.

However, before rushing out and commiting your business to the international market you need to understand that domestic trade differs substantially from international trade, and this brings many new factors into the picture.

Exchange rates: Every major country in the world has their own currency. When you’re importing / exporting with countries, you can choose to take payment in their currency or your currency. In order to convert between two currencies you perform a conversion at any bank.

This conversion is determined by the market defined exchange rate. Rate of exchange is the value or price of one currency in terms of another currency. Rate of exchange is also a very important factor of the economy, having an impact on a country’s overall ability to import and export.

Forms of import export exchange rate:

Two methods are used to determine foreign exchange rate.

i) Floating Exchange Rate
Floating (or flexible exchange rate), the one widely used in most parts of the world; It allows the markets to decide by means of supply and demand, as to which rate the local currency will be exchanged for in relation to a particular foreign currency. This type of exchange rate is often fluctuating, and the exporters need to be secure that some dramatic change will not severely impact their profits or the overall revenues of their business.

ii) Fixed Exchange Rate
Fixed exchange rates ( anticipated calculated rates for some future ) should always be calculated when pricing . Normally exporters come up with cushion to make sure they have a secured position in the event there is a substantial change in exchange rate. Fixed exchange rates are set by the government of the country for their own particular reasons.

Achieving the lowest cost possible is vital in the import export business, so it isn’t good business practice to put the entire burden upon your buyers. For this reason it is necessary that you observe the markets in the country you wish to export to, and even then, possibly hire someone to analyze the import export exchange rates in the markets before you choose the pricing levels of your particular goods.

Therefore, if you are looking for more details concerning Import Export Exchange Rates or you want to know the ins and outs of running an import export business then go to and claim your totally free report.

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