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Monday, June 29, 2009

What Is the Foreign Exchange Market

For buying foreign goods or services, or to invest in other countries, companies and individuals may need to first buy the currency of the country with which they are doing business. Generally, exporters prefer to be paid in their country’s currency or in U.S. dollars, which are accepted in the world.
When Canadians buy oil from Saudi Arabia they may pay in U.S. dollars and not in Canadian dollars or Saudi riyals, even though the United States is not involved in the transaction.
The foreign exchange market, or the "FX" market, is where the buying and selling of different currencies takes place. The price of one currency in terms of another is called an exchange rate.
The market itself is actually a worldwide network of traders, connected by telephone lines and computer screens—there is no central headquarters. There are three main centers of trading, which handle the majority of all FX transactions—United Kingdom, United States, and Japan.
Transactions in Singapore, Switzerland, Hong Kong, Germany, France and Australia account for most of the remaining transactions in the market. Trading goes on 24 hours a day: at 8 a.m. the exchange market is first opening in London, while the trading day is ending in Singapore and Hong Kong. At 1 p.m. in London, the New York market opens for business and later in the afternoon the traders in San Francisco can also conduct business. As the market closes in San Francisco, the Singapore and Hong Kong markets are starting their day.

Friday, June 26, 2009

Balance of payments

In economics, the balance of payments, (or BOP) measures the payments that flow between any individual country and all countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). Balance of payments is one of the major indicators of a country's status in international trade, with net capitoutflow.[citation al needed]
The balance, like other accounting statements, is prepared in a single currency, usually the domestic. Foreign assets and flows are valued at the exchange rate of the time of transaction.
this words was written after reading informations about WTO ( International Trade Organization ) .

History of trade

Trade originated with the start of communication in prehistoric times. Trading was the main facility of prehistoric people, who bartered goods and services from each other before the innovation of the modern day currency. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.[1]
Trade is believed to have taken place throughout much of recorded human history. There is evidence of the exchange of obsidian and flint during the stone age. Materials used for creating jewelry were traded with Egypt since 3000 BC. Long-range trade routes first appeared in the 3rd millennium BC, when Sumerians in Mesopotamia traded with the Harappan civilization of the Indus Valley. The Phoenicians were noted sea traders, traveling across the Mediterranean Sea, and as far north as Britain for sources of tin to manufacture bronze. For this purpose they established trade colonies the Greeks called emporia. From the beginning of Greek civilization until the fall of the Roman empire in the 5th century, a financially lucrative trade brought valuable spice to Europe from the far east, including China. Roman commerce allowed its empire to flourish and endure. The Roman empire produced a stable and secure transportation network that enabled the shipment of trade goods without fear of significant piracy.
we will stop here.

Thursday, June 25, 2009

International trade

International trade means the exchange of goods and services across national borders. In most countries, it represents a significant part of GPD. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialisation, advanced transportation, globalisation, multinational corporations, and outsourcing. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalisation".
Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialisation, and India, which historically had a more closed policy (although it has begun to open its economy, as of 2005). South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.
Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an embargo against Cuba for over 50years.
Although there are usually few trade restrictions within countries, international trade is usually regulated by governmental quotas and restrictions, and often taxed by tariffs. Tariffs are usually on imports, but sometimes countries may impose export tariffs or subsidies. All of these are called trade barriers. If a government removes all trade barriers, a condition of free trade exists. A government that implements a protectionist policy establishes trade barriers.
The fair trade movement, also known as the trade justice movement, promotes the use of labour, environmental and social standards for the production of commodities, particularly those exported from the Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.[4]
Standards may be voluntarily adhered to by importing firms, or enforced by governments through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the commonly adhered to prohibition of goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with fairtrade labelling requirements

Wednesday, June 24, 2009

The Law of International Trade: A Business Overview

U.S. companies engaged in international trade should be alert to the legal issues unique to the international context. This article is intended to raise your awareness of some of the legal issues encountered in international trade.
Exporting (shipping products outside the United States) is normally easy and subject to few restrictions. Most exports of ordinary trade goods to friendly countries are made under a so-called “general license.” There are, however, export restrictions you need to be aware of:
Some products (notably products that have military uses) are subject to export restrictions. Note that some products have “dual-use” applications, i.e., may be used for both civilian and military purposes. When in doubt seek advice as to whether your product may require a special export license, or may be unable to be exported.
Exports to some countries may be restricted. The Bureau of Industry and Security of the U.S. Department of Commerce has a website listing countries affected by export restrictions (“Where are you Exporting” Note that you may violate export restrictions by selling a product to a buyer that you know, or should know, intends to re-export the product to a country to which direct exports from the U.S. are prohibited.
Export sales to some purchasers may be restricted. You should consult the “do not sell” lists maintained by the Bureau of Industry and Security of the U.S. Department of Commerce (“Who Will Receive Your Item” .and by the Office of Foreign Assets Control of the United States Treasury Department Under U.S. law you have an affirmative obligation to “know your customer,” including the ultimate buyer if your customer re-exports the products. You will not be able to plead ignorance if your Canadian customer sells your products to the Cuban military and you knew or should have known that this was your customer’s intention.
Freight-Forwarders. When exporting products it will be helpful to develop a relationship with a reputable freight-forwarder who can help ensure that your company complies with the laws and regulations governing exports. Deemed Exports. It is possible to make a prohibited export of technology without knowing you are doing so. Technology whose export is restricted may be “imbedded” in your product’s controls. And you may be “deemed” to export technology merely by giving individuals from a foreign country access, in the United States, to that technology sufficient to enable those individuals to take that technology back home with them.

Monday, June 22, 2009

Before Starting An Import Export Business

The How To Start An Import Export Business Toolkit Is Your Roadmap To International Trade Success And A Comprehensive Resource Library To Help Guide You Throughout Your International Business Career
Before reading any further, stop a moment and ask yourself if you are really serious about learning "How To Start An Import And Export Business"? What was your answer? If you are serious, then you are strongly encouraged to read what follows. Every word is worth your time.
The Import-Export course toolkit includes all the resources and tools you need to start and operate a profitable international trading company - whether from your own home or from your company's office. Bold statement, yes, but one based on over 25 years experience in the business and personal review of most courses and books on the market during that time. search about books to help you.

International markets

BeefWhile imports of U.S. beef in 2007 were virtually double 2006 number, and eventually topped out at $44million, the reach of U.S. beef is still too limited to create a widespread opportunity for most EU consumers to try the product. U.S. beef has been largely absent from the European Union for the past 19 years, and there is a subsequent lack of consumer knowledge about the attributes of U.S. beef. Nonetheless, consumers and importers who have tried U.S. beef recognize the quality and a proportion of EU consumers are ready to pay the premium price. Italy and Germany are the primary markets for U.S. beef, with product also sold in Holland, France, Belgium and the U.K. EU importers are working hard to expand their sales across the EU and are developing business in Spain, Portugal, Greece, Sweden and netherland

Sunday, June 21, 2009

Foreign Exchange

when deems it necessary for the prevention of drastic exchange rate fluctuation of our currency, or for the maintenance of our authorized foreign exchange banks' international credence, impose the following restrictions on the authorized foreign exchange banks, as a Cabinet Order provides for:
*To prescribe a limit on their foreign exchange position (which means the difference between the foreign currency assets balances and foreign currency liabilities balances computed by a method defined by a Cabinet Order), or to require them to satisfy certain requisites prescribed by a Cabinet Order for their foreign exchange business; and
*To banning interest on certain accounts, designated by a Cabinet Order, which are in our currency and opened in the name of a non-resident.

Trade finance

Trade finance is related to international trade. While a seller (the exporter) can require
the purchaser (an importer) to prepay for goods shipped, the purchaser (importer) may wish to reduce risk by requiring the seller to document that the goods have been shipped. Banks may assist by providing various forms of support. For example, the importer's bank may provide a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading. The exporter's bank may make a loan (by advancing funds) to the exporter on the basis of the export contract.
Other forms of trade finance can include export credit insurance, export factoring, forfaiting and others. in many countries,The trade finance is often supported by quasi-government entities known as export credit agencies that work with commercial banks and other financial institutions.

Saturday, June 20, 2009

How to Making the Export Decision

Exporting is crucial to America's economic health.
Increased exportsmean business growth, and business growth means more jobs. Yet, only asmall percentage of potential exporters take advantage of theseopportunities. It is critical for U.S.A businesses to think globally. However,you may have discovered your company is already competing internationally-- foreign-owned companies are competing with you in your "domestic"markets. The division between domestic and international markets isbecoming increasingly blurred. Your business cannot ignore internationalrealities if you intend to maintain your market share and keep pace withyour competitors. Making the export decision requires careful assessmentof the advantages and disadvantages of expanding into new markets. Oncethe decision is made to export, an international business plan isessential. This chapter presents the advantages and disadvantages ofexporting and offers a sample business plan.

Foreign Market Entry

we Having determined the best international markets for your products,you now need to evaluate the most profitable way to get your products topotential customers in these markets. There are several methods of foreign market entry including exporting,licensing, joint venture and off-shore production. The method you choosewill depend on a variety of factors including the nature of your particularproduct or service and the conditions for market penetration which exist inthe foreign target market.
Exporting can be accomplished by selling your product or servicedirectly to a foreign firm, or indirectly, through the use of an exportintermediary, such as a commissioned agent, an export management or tradingcompany.

Friday, June 19, 2009

The Functions of the Foreign Exchange Market

There are five function of the foreign exchange market:
1-International Clearing:
Individuals , firms and governments need foreign exchange to pay for their imports of goods and services, and to collect the value of their exports (visible or invisible).
2-International Credit:
Credit is needed as goods (and services) move from a seller to a buyer, and also to allow some time for the buyer to resell the goods and be able to pay for these goods.
Arbitrage can be defined as simultaneous buying and selling of foreign currencies to have some profits from differences between exchange rates prevailing at the same time in different financial centers around the world .It is risk-less process.

Thursday, June 18, 2009

The Types of Foreign Exchange Markets

* The Spot Market:
In the spot market, dealers of foreign exchange transactions have to deliver and receive currencies at the immediate moment. The rate of exchange used in these transactions is the spot exchange rate
* The Forward Mark
A forward transaction is an agreement (called the forward-exchange contract) between two parties which requires the delivery of one currency for anther at some future date (one month, two months,… ahead), and at a price used is called the forward exchange rate.

Saturday, June 13, 2009

Definition of Foreign Exchange Market

The foreign exchange market means the framework within which individuals, Firms, Government, and banks buy and sell foreign currencies .
The foreign exchange market consist of a number of banks, brokers, dealers and other monetary authorities engaging in buying and selling of the foreign exchange.
The foreign exchange market for any currency is composed of all the locations or cities where the currency is exchanged for other currencies.


On of the distinguishing features of international trade is the involvement of foreign currencies . if a seller in Dubai sells goods to a buyer in Abu Dhabi he is paid in local currency because they both are residents of one country .
If a buyer in France buys goods from a seller in U.S.A. the problem of foreign exchange exits, because the buyer wants to pay in France currency and the seller wants to receive his money in US Dollars.
Because different nations use different currencies every economic transaction between a resident of one country and a resident of another, necessarily require the exchange of one currency into another.

Friday, June 12, 2009

foreign trade and national income

Introduction: during any one year period, the economy produces a given value of final goods and services known as the gross national product.national income accounts divide GNP among the four possible uses for wich a country is output is purchased:a) consumption(C): it is the portion of GNP purchased by the private sector to fulfill current wants (i.e. the amount consumed by private domestic residentes).b) investment(I): it is the part of output used by firms to produce future output (i.e. the amount put aside by firms to build new plant and equipment for future production).c) government expenditure.d) current account balance.

Disadvantages of international trade

Althou the above mentioned advantagesof foreign trade, they are counterbalanced, to some extent, by disadvantages such as: a) dependency: foreign trade makes a country IS ECONOMY seriously dependent upon other countries . if, due to war or any other causes (e.g. laour strikes ), goods cannot move freely to and from the country, it will face a critical situation. b) exhaustion of resources: foreign trade may lead to exhaustion (or depletion) essential materials of country, which cannot replaced. this could be at the expense of the future generations.c) adverse consumption habits: foreign trade may adversely affect the consumption habits of a country through the importation of harmful goods, such as opium, sexy magazines and movie films. Moreover, the domestic consumers will accustom to cheap imports, and oppose any import substitution policy associated with higher prices.

Sunday, June 7, 2009

advantages of foreign trade

there are many advantages that accrue to the nations engaged in foreign trade
there is advantages wich comes from the principle of division of labour as aplied to the various countries
foreign trade enables nation to specialize in the production of those goods in wich they have greatest advantage. this leads to the production of good under the most favorable conditions and thus increases the total wealth and welfare of the world
foreign trade enables concumer not only to engoy the products of foreign countries wich their own country could never produce ,but also to get their requirements from the cheapest markets of the world . they very fact that goods wich are imported from abroad show that their price is cheaper than the similar home products