In this week's discussion let's turn our focus on the International Monetary System and International Finance. We'll explore the implications of the exchange rate controls and strategy in place and how these affect trading partners.
So from our readings, we know that the international monetary system is an institutional arrangement among the central banks of the countries that belong to the International Monetary Fund (IMF).
The objective of this system is to create an international environment that is conducive to the free flow of goods, services, and capital among nations. This system also strives to create a stable foreign exchange market, guarantee the convertibility of currencies and ensure adequate liquidity. The IMF is one of the primary organizations in this system.
For this week's discussion assignment:
Assume that you are a manager at a firm interested in entering your assigned country (see list below). As part of your initial analysis, top management would like to know about the level of currency and financial risks associated withyourassigned country's market. Using one of the exchange calculators such aswww.x-rates.com compare the exchange rates of various currencies, including the Dollar,Euro, Yen, and the one for your assigned country (list below). What is the rate for these currencies today? What was the Euro-Dollarexchange rate one year ago? What's the exchange rate of your country's currency vs. the dollar and the Euroone year ago? What factors might have caused the fluctuation in this rate during the year? Is this currency stable or not? What's the IMF country report for your assigned country (visit https://www.imf.org/external/country/)? With this information, and using resources atglobalEDGETM(globaledge.msu.edu), write a short report on the current status of these risks, as well as the state of the financial system and historical exchange rate stability for your assigned country. Based on these findings, what is your recommendation?
Country:Guatemala
3 references at least.