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Friday, 7 October 2016

The role of money in international Business relationship

The role of money in international Business relationshipmoney which is a medium of exchange performs similar functions in international transactions as in local business transactions. these functions of money include as a medium of exchange, measure of value,store of value,unit account, etc. it could have been difficult for international trade to take place smoothly without the use of money. even the
introduction of a counter trade which is a medium form of trade by barter has not reduced the role and significance of money in international transactions. money is stil used in measuring the value of goods exchanged in counter trade. money therefore made it possible and facilitate international transactions.

however ,money is used in one country does not serve as a legal tender in another country. every country has its own currency which is different from currencies of other countries. two or more currencies may have currencies with the same name but their values differ. for instance U.S.A, Liberia, Canada etc. have currencies that have the same name - dollar, but their outlook and value are not the same.

since international transactions involve payments and receipts of foreign currencies , foriegn exchange market plays significant role in resolving exchange problems. this is so because, since Nigeria's naira cannot be used to by goods from America or even Ghana no matter the extent of their relationship, naira has to be exchanged for American dollar or Ghana's cedi.

CONCLUSION

however as a result of the level of their economy and long existence, British pound sterling and American dollar serve as the most generally accepted foreign currencies in the world

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