Q3-8 When a nation chooses to fix or float its currency exchange rate, it should consider Select one: a. only its domestic banks, importers, and exports. b. only whether it has a great deal of economic integration. c. only whether it has similar circumstances in terms of demand or supply shocks with its trading partners. d. both the level of economic integration and the similarity of demand or supply shocks.

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A:

Q: A strong domestic currency is good for a country's balance of trade Select one : True or False

A: A strong domestic currency is good for a country's balance of trade

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.