Floating exchange rates can either have negative or positive impact on a company operating in global markets.

Question

Quizplus · Accepted Answer

The impact of floating exchange rates depends on various factors such as the nature of the business, the currencies involved, and the geographical location of the company. For some companies, a weaker currency can lead to lower costs and increased competitiveness, while for others, it can result in reduced profitability and higher costs of imports. Similarly, a stronger currency can benefit some companies by increasing profits on exports, while others may face a decline in sales due to higher prices. Therefore, it is important for companies to carefully monitor exchange rate fluctuations and develop strategies to manage the impact.

Floating Exchange Rates Can Either Have Negative or Positive Impact