Currency and International Commerce
International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for people and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates.
Business has become increasingly international, and companies cannot ignore the impact of currency changes on cash flows, profitability, and their asset and liability position. No company is completely immune the cash received from exporting is affected by the relationship between the currency used by the customer to pay and the currency in which the cost of providing the product or service is denominated. Prices of most commodities have been volatile and rising and falling dramatically in recent years. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk a