Exchange Rates: What They Are And How They Can Impact Your Business
Key TakeawaysThe exchange rate is the price of one currency in terms of another. For example, if USD 1 = CAD 1.4, this means it costs 1 US dollar to buy 1.4 Canadian Dollars.Exchange rates can lower import costs or increase export revenue if your home currency weakens, but it can also do the opposite if it strengthens.Businesses can mitigate the risks of currency fluctuations through various strategies, which include currency hedging (locking in a future exchange rate).As an international business, you may have ongoing international payments in different currencies flowing into your bank account or may need to pay suppliers in a currency different from your home currency.Therefore, it is inevitable to understand how one of the most liquid financial markets works and eventually, gain profits through these value fluctuations.This article will outline everything you need to know about exchange rates, including what they are, why they matter to your business, and how you can make them work...