The Impact of Currency Exchange Rates on International Trade
Currency exchange rates have a profound impact on international trade. Fluctuations in exchange rates can affect export volumes, import costs, market competitiveness, and profitability for businesses engaged in cross-border transactions. Exchange rate movements introduce uncertainty and financial risks, requiring businesses to employ strategies such as pricing adjustments, hedging, and diversification to manage the impact. Government policies and interventions also play a role in shaping currency exchange rates. Monitoring and managing exchange rate risks are essential for businesses to remain competitive and resilient in the global market.