The foreign exchange market has made significant strides in reducing the risks associated with the settlement of FX transactions. Substantial FX settlement-related risks remain, however, not least because of the rapid growth in the FX trading. BIS has released supervisory guidance for managing risks associated with the settlement of foreign exchange transactions. It provides a […]
In this lecture on consolidation accounting, you will learn how to translate foreign subsidiaries using two methods, namely temporal method, and current rate method.
In this lecture, you will learn about accounting for foreign exchange speculative contracts and cash flow hedges.
In this article, you will learn about how to account for foreign currency transactions undertaken by the domestic company. A foreign exchange transaction takes place when a domestic company (such as a company in the US) enters into a transaction with a buyer or seller in another country (such as UK) to buy or sell […]
Countries often enter into different types of agreements with respect to their trade policies. The objective of such agreements is to reduce the trade barriers among countries. These types of agreements are generally referred to as trade blocs or regional trading agreements (RTA), under which a group of countries agree to reduce or eliminate trade […]
To buy foreign goods and services, the firms and individuals need to buy the currencies of the foreign countries. Similarly they need to purchase the currency of domestic country while paying for goods and services to foreigners. The balance of payments is the method used by countries to monitor all their international transactions. The Federal […]
Trade Restrictions In many countries governments will impose trade restrictions that will restrict foreign companies from supplying goods to these countries. Below are the main reasons for imposition of trade restrictions. Protect new industries: The government may want to protect any new industry from competition till it grows to a certain level. National security: The […]
There are several models that are used to analyze the dynamics of international trade. Two such models are Ricardian and Heckscher-Ohlin models. Let’s look at each of them in detail. Ricardian Model The focus is on comparative advantage. The model suggests that the countries specialize in producing goods and services that they can do best. […]
In international trade, companies can have absolute and comparative advantage in producing goods and services over other countries. A country has absolute advantage in producing goods if it is able to produce goods at a lower cost in terms of resources compared to other countries. On the other hand, the country that can produce a […]
International trade clearly has more benefits than the costs for the economies as a whole. The key idea is that as different global economies specialize, nations can gain from trading with one another by creating abundances of those products and services that they do best. The excess of one nation’s product can then be traded […]