Global Financing and Exchange Rate Mechanisms.
Countertrade.
Countertrade is a creative sticky sales project that might not otherwise happen due to currency barriers. Countertrade is an umbrella term for a variety of unconventional reciprocal trading arrangements. It often occurs between developed and developing nations, but it also occurs between one developing nation and another( Nelson, 1999). It is the trade between two countries in which goods are traded for other goods rather than for hard currency. Countertrade is often the solution for exporters that may not be able to be paid in his or her home currency and according to the text few exporters would desire payment in a currency that is not convertible.
"Sometimes both parties are happy with the goods they receive, other times one country will liquidate the received asset, ultimately receiving cash in the deal. This is also referred to as "using barter to complete a trade." (www.investopedia.com)
Soft Currencies.
Another name for "weak currency," there is very little demand for this type of currency and values often fluctuate. Currencies from most developing countries are considered to be soft currencies. (www.investopedia.com)
Hard Currencies.
A currency, usually from a highly industrialized country, that is widely accepted around the world. The U.S. Dollar and the British Pound are good examples of a hard currency. (www.investopedia.com)
Countertrade is an general term covering a wide range of commercial mechanisms for reciprocal trade. Reciprocal trading (two-sided trading, trade in return) occurs when the trade customers is also a supplier. The reciprocal trading arrangements may or may not be formally linked. In practice, reciprocal trade may strengthen an existing trading relationship, and may even create mutual dependencies, which may create new trade relationship. Barter is probably the oldest and best known example of countertrading, however others, such as offset, buyback, tolling and switch trading, have also evolved to...
Reviews of: "Global Financing and Exchange Rate Mechanisms."
:
More Economics
essays:
Global Financing and Exchange Rate Mechanisms
... border trading in the EU has accelerated. (Global Economics, 1999) Without currency matching rules and exchange rate risk, financing costs have been reduced. Another important development has ...
Global Financing and Exchange Rate Mechanisms
... home office' (Cavisgil 1981). This may occur when foreign repatriation procedures are ambiguous or poorly publicized or when governments fail to comply with their own regulations, effectively limiting, delaying, or discouraging repatriation. Currency ...
Impact of Euro on Foreign Exchange rate risk
... or outside of the euro zone has they moved from home currency to euro. (John Capstaff, Andrew Marshall, The Introduction of the ... Eurozone country - French firm, after France adopt the Euro, the barriers and shortcomings of the trades were starting to decrease, the market integration were begin to ...
Floating Exchange Rates
... National Review 12 September 1994: 32-36. _________,'Introduction.' The Merits Of Flexible Exchange Rates. Ed. Leo Melamed. Fairfax, Virginia: George Mason University Press, 1988. xix-xxv. Habermeier, Karl and Horst & Ungerer. 'A Single Currency for the European Community.' Finance & Development ...
Explain the Key Models of Exchange Rate Determination
... no barriers to trade and transportation costs, the price of an identical good must sell for the same price in different countries as long as it is expressed in one currency. This ... baskets of commodities have the same price abroad and at home. The PPP is primarily based on the assumption of the ...
Exchange Rates
... international trade. Economic instability can increase exchange rate risk, and in turn can discourage international transactions. Especially needed for the developing nations of the time, a country may decide to peg its currency to ...
Exchange Rate in Brazil.
... in terms of business cycles, pegging would force Brazil to give up some of their best fiscal tools, Brazil and the U.S. are still quite different; developed vs emerging markets Currency Basket ...
Should Australia return to a fixed exchange rate, rather than a floating currency exchange system? (oral presentation)
... there currency against the chosen commodity. As a result, inflation rates and growth a depicted by international trade and capitals flows, rather then the micro economic condition of the nation. The ...
Hard currency and countertrade
Hard currency, in economics, refers to a currency in which investors have confidence, such as that of a politically stable country with low inflation and consistent monetary and fiscal policies, and one that if anything is tending to appreciate against other currencies on a trade-weighted basis(wikipedia). USA dollar is an example of hard currency. there are many dollars circulating outside USA. In other words, transaction usually takes place in US dollars. it is regarded as a safe currency. because it has international acceptance and you can save it. but you can not use all countries' currencies. because they are non-convertable. as a result of this, countertrade is a method if you want to do business with those countries which have a shortage of hard currency.
1 out of 1 people found this comment useful.