INTERNATIONAL

BUSINESS & TRADE

PRESENTATION
BY:

• AHMAD AZMAT (5016) & SHOAIB RAEFIQ (5156)

• MUQADDIS SHEHZAD (1042) & HAROON TAHIR (1005)

• SHANZA NAVEED (1036) & ASAD-UR-REHAMN (1059)

 PRESENTED BY: AHMAD (5016)
DEFINITION OF EXCHANGE RATE:
EXCHANGE RATES ARE THE RATES AT WHICH ONE
CURRENCY CAN BE EXCHANGED FOR ANOTHER.
THEY REPRESENT THE VALUE OF ONE CURRENCY IN
TERMS OF ANOTHER CURRENCY. EXCHANGE RATES
ARE ESSENTIAL FOR CONDUCTING INTERNATIONAL
TRADE, TRAVEL, AND INVESTMENT BECAUSE THEY
DETERMINE HOW MUCH ONE CURRENCY IS WORTH
WHEN CONVERTED TO ANOTHER CURRENCY.

TYPES OF EXCHANGE RATES

1. FIXED EXCHANGE RATE: A CURRENCY’S VALUE
IS PEGGED OR FIXED TO ANOTHER MAJOR
CURRENCY (LIKE THE US DOLLAR) OR A BASKET OF
CURRENCIES. THE GOVERNMENT OR CENTRAL BANK
MAINTAINS THIS FIXED RATE.
-EXAMPLE: THE HONG KONG DOLLAR (HKD) IS
PEGGED TO THE US DOLLAR (USD) AT
APPROXIMATELY 7.8 HKD PER 1 USD.

2. FLOATING EXCHANGE RATE: THE VALUE OF THE

CURRENCY IS DETERMINED BY THE FOREIGN
EXCHANGE MARKET THROUGH SUPPLY AND
DEMAND RELATIVE TO OTHER CURRENCIES. THESE
RATES FLUCTUATE CONSTANTLY.
-EXAMPLE: THE US DOLLAR (USD) AND THE EURO
(EUR) HAVE FLOATING EXCHANGE RATES.

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 3. PEGGED (OR MANAGED FLOAT) EXCHANGE
RATE: A HYBRID SYSTEM WHERE THE CURRENCY IS
MOSTLY ALLOWED TO FLOAT IN THE OPEN MARKET,
BUT THE CENTRAL BANK CAN INTERVENE TO STABILIZE
OR INCREASE THE CURRENCY'S VALUE.
-EXAMPLE: THE CHINESE YUAN (CNY) IS
MANAGED BY THE PEOPLE’S BANK OF CHINA WITHIN
CERTAIN LIMITS.

PRSENTED BY: SHOAIB (5156)

FACTORS INFLUENCING EXCHANGE
RATES
1. INTEREST RATES: HIGHER INTEREST RATES OFFER
LENDERS IN AN ECONOMY A HIGHER RETURN
RELATIVE TO OTHER COUNTRIES. HIGHER INTEREST
RATES CAN ATTRACT FOREIGN CAPITAL AND CAUSE
THE EXCHANGE RATE TO RISE.

2. ECONOMIC INDICATORS: INDICATORS LIKE

GDP GROWTH, EMPLOYMENT RATES, AND
MANUFACTURING OUTPUT CAN AFFECT INVESTOR
PERCEPTION AND INFLUENCE EXCHANGE RATES.

3. INFLATION RATES: LOWER INFLATION IN A

COUNTRY COMPARED TO OTHER COUNTRIES CAN
INCREASE ITS CURRENCY'S VALUE AS ITS
PURCHASING POWER RISES RELATIVE TO OTHER
CURRENCIES.

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 4. POLITICAL STABILITY AND ECONOMIC
PERFORMANCE: COUNTRIES WITH LESS RISK OF
POLITICAL TURMOIL ARE MORE ATTRACTIVE TO
FOREIGN INVESTORS, LEADING TO A STRONGER
CURRENCY.

5. MARKET SPECULATION: IF INVESTORS BELIEVE A

CURRENCY WILL STRENGTHEN IN THE FUTURE, THEY
WILL BUY MORE OF THAT CURRENCY NOW,
INCREASING ITS VALUE.

PRESENTED BY: MUQADDIS SHEHZAD (1042)

INTERNATIONAL CAPITAL MARKETS
INTERNATIONAL CAPITAL MARKETS ARE PLATFORMS
THAT FACILITATE THE BUYING AND SELLING OF
FINANCIAL SECURITIES, SUCH AS STOCKS, BONDS,
AND OTHER INVESTMENT INSTRUMENTS, ACROSS
NATIONAL BORDERS. THESE MARKETS ALLOW
COMPANIES, GOVERNMENTS, AND INVESTORS TO
RAISE AND INVEST CAPITAL ON A GLOBAL SCALE,
PROMOTING ECONOMIC GROWTH AND
DEVELOPMENT.

COMPONENTS OF INTERNATIONAL
CAPITAL MARKETS

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 1. EQUITY MARKETS: WHERE STOCKS OR SHARES OF
COMPANIES ARE TRADED.
-EXAMPLE: NEW YORK STOCK EXCHANGE (NYSE),
LONDON STOCK EXCHANGE (LSE).

2. DEBT MARKETS: WHERE BONDS AND OTHER DEBT

SECURITIES ARE TRADED.
-EXAMPLE: US TREASURY BONDS, EUROBONDS.

3. FOREIGN EXCHANGE MARKETS: WHERE

CURRENCIES ARE TRADED.
-EXAMPLE: THE FOREX MARKET, WHERE TRADERS
EXCHANGE CURRENCIES LIKE USD, EUR, JPY.

4. DERIVATIVES MARKETS: WHERE FINANCIAL

DERIVATIVES, SUCH AS FUTURES, OPTIONS, AND
SWAPS, ARE TRADED.
-EXAMPLE: CHICAGO MERCANTILE EXCHANGE
(CME), EURONEXT.

PRESENTED BY: HAROON (1005)

BENEFITS OF INTERNATIONAL
CAPITAL MARKETS
1. ACCESS TO CAPITAL:
COMPANIES IN
DEVELOPING COUNTRIES CAN ACCESS CAPITAL
FROM DEVELOPED MARKETS.

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 2. LOWER COST OF CAPITAL:
INCREASED
COMPETITION AMONG INVESTORS CAN LOWER THE
COST OF BORROWING.

3. GLOBAL ECONOMIC INTEGRATION:

PROMOTES INTERCONNECTEDNESS AND
INTERDEPENDENCE AMONG ECONOMIES.

RISKS AND CHALLENGES

1. EXCHANGE RATE RISK: FLUCTUATIONS IN
CURRENCY EXCHANGE RATES CAN AFFECT
INVESTMENT RETURNS.
2. POLITICAL RISK: CHANGES IN GOVERNMENT
POLICIES OR POLITICAL INSTABILITY CAN IMPACT
MARKETS.
3. REGULATORY DIFFERENCES: VARIATIONS IN
REGULATIONS ACROSS COUNTRIES CAN
COMPLICATE CROSS-BORDER TRANSACTIONS.
4. MARKET VOLATILITY: INTERNATIONAL MARKETS
CAN BE MORE VOLATILE DUE TO GLOBAL
ECONOMIC EVENTS.

PRESENTED BY: ASAD (1059)

MONATARY POLICY

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 MONETARY POLICY REFERS TO THE ACTIONS OF A
CENTRAL BANK (SUCH AS THE FEDERAL RESERVE IN
THE UNITED STATES) TO CONTROL THE MONEY SUPPLY
AND INTEREST RATES TO PROMOTE ECONOMIC
GROWTH, STABILITY, AND LOW INFLATION.

ASPECTS
1. INTEREST RATES: THE CENTRAL BANK SETS
INTEREST RATES TO INFLUENCE BORROWING COSTS
AND CONSUMPTION.
2. MONEY SUPPLY: THE CENTRAL BANK MANAGES
THE MONEY SUPPLY BY BUYING OR SELLING
GOVERNMENT SECURITIES.
3. RESERVE REQUIREMENTS: THE CENTRAL BANK
REQUIRES COMMERCIAL BANKS TO MAINTAIN A
MINIMUM RESERVE RATIO.
4. OPEN MARKET OPERATIONS: THE CENTRAL
BANK BUYS OR SELLS GOVERNMENT SECURITIES TO
INJECT OR ABSORB LIQUIDITY.

PRESENTED BY: SHANZA (1036)

BENEFITS OF MONETARY POLICY
1. ECONOMIC GROWTH: MONETARY POLICY CAN
STIMULATE ECONOMIC GROWTH BY LOWERING
INTEREST RATES AND INCREASING MONEY SUPPLY.

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 2. LOW INFLATION: MONETARY POLICY CAN HELP
MAINTAIN LOW INFLATION BY CONTROLLING
MONEY SUPPLY AND INTEREST RATES.
3. FINANCIAL STABILITY: MONETARY POLICY CAN
HELP MAINTAIN FINANCIAL STABILITY BY REGULATING
BANKS AND MANAGING LIQUIDITY.
4. JOB CREATION: MONETARY POLICY CAN HELP
CREATE JOBS BY STIMULATING ECONOMIC GROWTH.

RISKS
1. INFLATION: EXCESSIVE MONEY SUPPLY CAN
LEAD TO HIGH INFLATION.
2. ASSET BUBBLES: LOW INTEREST RATES CAN
CREATE ASSET BUBBLES IN STOCKS, REAL ESTATE, OR
COMMODITIES.
3. CURRENCY DEVALUATION: EXCESSIVE MONEY
SUPPLY CAN LEAD TO CURRENCY DEVALUATION.
4. ECONOMIC OVERHEATING: EXCESSIVE
MONETARY STIMULUS CAN LEAD TO ECONOMIC
OVERHEATING, FOLLOWED BY A CRASH.
5. INEQUALITY: MONETARY POLICY CAN WIDEN
INCOME AND WEALTH INEQUALITY BY BENEFITING
ASSET HOLDERS AT THE EXPENSE OF SAVERS.

BY UNDERSTANDING THE ASPECTS, BENEFITS, AND

RISKS OF MONETARY POLICY, CENTRAL BANKS CAN
USE THESE TOOLS EFFECTIVELY TO PROMOTE
ECONOMIC GROWTH, STABILITY, AND LOW
INFLATION.
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