Need help with the following: I am a professional landscaping business located in Phoenix, Arizona. We design Install and maintain high-end gardens for customers located here in the USA and Mexico. Exchange rates are important for our billing department because not only we provide services abroad but also procure a lot of our construction materials from Mexico.
Select one problem that relates to you and your current position in the work environment. Complete your response to 750-1,000 words. Please support your response to personal experiences or examples.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
The changes in the exchange rate affect the demand for the imports and export for the firm and in this case the price for the product of the firm keep fluctuating so as to fit the changing of the exchange rate in the economy and therefore this lead inflation rate of the firm leading to changes in the demand and supply of the product of the firm.
The price of the product in the firm is affected by the exchange rate due to different factor in the economy for example if us has a stronger dollar than the Mexican currency then the exports from the US will be relatively more expensive due to high-interest rate and hence effect on the price of the product of the firm. Due to this reason the quality of supply of the product of the firm decrease while the demand of the product increase due to the high cost of the product.
The future profit expectation of the firm depends on the current price of the product in that the larger the expected profit from holding the dollar the greater the quality of the dollar demanded today and hence the expected profit on the exchange rate in future will depend on the film plane and the economy of the country…
Future changes in the exchange rate are generally determined by the demand and supply factors such as the interest rate, inflation, and economic growth, for instance, the greater demand for American goods then there will tend to appreciate of the dollar and therefore if the market was worried about dollar gaining value then they would sell the us dollar which will tend lead to fall in the value of the dollar.