Global Marketing Management : Discussion2
TonKung
Discussion2.docDiscussion 2
"Money and Culture" Please respond to the following:
· Discuss the role of the International Monetary Fund in global trade and how this differs from the role of the World Bank.
· Your textbook discusses economic and political factors that influence the exchange rates of foreign currency. Choose from one (1) of the economic and political factors discussed in your textbook and explain how your selection influences foreign exchange rates. Next, determine the impact of your chosen factor on the exporting and importing country.
Response 1 (David) :
Discuss the role of the International Monetary Fund in global trade and how this differs from the role of the World Bank.
The International Monetary fund was established at Bretton Woods, New Hampshire. The IMF was designed to be a check and balance to the newly agreed monetary systems. The World Bank was to serve as reconstruction and development to countries in postwar. The Most Notable difference between the two ideas is the World banks goals of ending extreme poverty within a generation and boost shared prosperity.
Your textbook discusses the economic and political factors that influence the exchange rates of foreign currency.
The Two factors that I choose are Government Spending and Leadership Change.
Government Spending can also be a huge factor in the exchange rate of a currency. War, political, individual interest can be attributed to government spending. Leadership changes can have a huge effect on the currency. With the current president and leadership in place. The dollar has become very strong. The dollar continues to climb at 7% dollar index. I would say that leadership has a huge part in the value of the dollar. Every leader has their motives and can be driven by different things.
Next, determine the impact of your chosen factor on the exporting and importing country.
China vs the US
China is a direct influence on the US dollar. China loosely pegs its value of the yuan to the dollar. They do this to manage the price of their exports. China wants to make sure the items that are being shipped and sold in the US are priced for the market. China understands the importance of the US market and continues to modify its rate for maximum profit off of the US. This has always seemed to me as a form of currency manipulation, but it appears to be legal.
https://www.cnn.com/2018/10/01/economy/china-currency-yuan-rmb/index.html
https://www.cnbc.com/2019/02/22/us-wants-a-more-stable-yuan-china-wants-that-too-experts.html
Response 2 (Jasmine) :
· Discuss the role of the International Monetary Fund in global trade and how this differs from the role of the World Bank.
The International Monetary Fund (IMF) was established to oversee the newly agreed upon monetary system. During the 1960s, the U.S. Treasury was obligated to convert dollars to gold by demand of foreign central banks. The IMF was an agency within the United Nations, established to effectively promote monetary cooperation between countries and to facilitate trade expansion, and to improve economic conditions and contribute to increased employment in all member countries. Different from the IMF, the World Bank, formally known as the International Bank for Reconstruction and Development, was initially intended for financing of postwar reconstruction and development. Currently, the World Bank has two important goals to boost shared prosperity and ending extreme poverty within a generation. They also provide grants and low interest loans to developing countries and invest in agriculture, health, and education.
· Your textbook discusses economic and political factors that influence the exchange rates of foreign currency. Choose from one (1) of the economic and political factors discussed in your textbook and explain how your selection influences foreign exchange rates. Next, determine the impact of your chosen factor on the exporting and importing country.
Economic growth is a major macroeconomic factor that affects importing, exporting, and foreign exchange rates. If a domestic economy is growing fast relative to its major trading partners, the country’s imports could rise faster than exports, and may result in deterioration of the trade balance and cause depreciation of its currency. However, if a domestic economic growth attracts a large amount of international investment, it could offset the negative trade effect and potentially result in appreciation of the domestic currency.
Kotabe, M., & Helsen, K. (2017). Global marketing management (7th ed.). Hoboken, N.J.: John Wiley & Sons, Inc.
