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The first thing you should know about currencies is that their values are hardly constant. This is partly due to the unexpected movements in exchange rates which can either be favourable or not.
According to Investopedia, “exchange rates have a substantial influence on companies’ operations and profitability. Exchange rate volatility affects not just multinationals and large corporations, but it also affects small and medium-sized enterprises, including those who only operate in their home country. While understanding and managing exchange rate risk is a subject of obvious importance to business owners, investors should also be familiar with it because of the huge impact it can have on their holdings”.
Exchange rate basically means the value of a currency when converted to another currency during trade. The dollar, for example, is currently the most universally accepted benchmark currency because of its wide usage during international trade.
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