How do currency fluctuations affect import/exporters?

Exchange rate volatility can work against an international company if a payment in a foreign currency has to be made at a future date. There is no way to guarantee that the price in the currency market will be the same in the future-it is possible that the price will move against the company, making the payment cost more. On the other hand, the market can also move in a business' favor, making the payment cost less in terms of their home currency. Generally, firms that export goods to other countries benefit when their home currency depreciates, since their products become cheaper in other countries. Firms that import from other countries benefit when their currency becomes stronger, since it enables them to purchase more. Some Currencies are More Volatile than Others Business owners with commercial ties to countries experiencing major changes in their economies are even more vulnerable to currency rate risk. An example of a risky currency is the Japanese Yen. A rocky economic ...  more