Worried about how "currency wars" may impact your business and its ability to compete internationally? Many company owners are becoming increasingly concerned about currency devaluation overseas and whether it could leave a lasting mark on foreign exchange markets and business opportunities overseas.
Currency wars starting?
It's important to understand what the term means before getting worried about how it will impact your company. A currency war refers to an attempt by a country to gain an economic advantage by devaluing its money, something that has happened in nations across the world for decades. It has recently been in the news more as the Group of Seven countries publicly restated its commitment to market-determined exchange rates, rather than artificially created ones. The statement comes in light of Japan's new devaluation policies that are causing the yen to weaken dramatically. However, it's not just Japan that's employing such tactics.
"The currency war is intensifying: the number of participants is rising, fresh policy tools are being used to fight and the scale of influence on the wider foreign exchange market is increasing," read research from British bank HSBC.
HSBC called out Japan and Switzerland as some of the countries guilty of employing currency war strategies.
Coping with devaluation when trying to do business overseas
As various nations across the world attempt to devalue their currency and boost their economies, companies expanding globally need to be aware of what policies are in placeÂ and how those monetary tactics will have an impact on their business. Firms new to global business may want to work with a financial institution well-versed in international banking inquiries and foreign exchange markets. Not only can currency devaluation have an impact on stocks, it can also have an effect on the price of materials, cost of consumer goods and even labor expenses.
But where can you find a professional who knows how to guide an expanding and growing company? Try your local small or mid-sized bank. While you may assume a larger financial institution has the answers, working with a smaller firm allows you to not only get the solutions you seek, but enjoy more personalized servicesÂ and custom options that can benefit your business.
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