Answer the following questions:
What makes international trade so easy?
What is an exchange rate?
Give examples of exchange-rate terminology.
What are the reasons for the exchange rate changes?
Fill in the blanks with appropriate words:
narrowing foreign currency fix an increase cheaper gold standard
Depreciation of currency refers to the fact that one currency has become … in terms of another one.
Appreciation is … in value of one currency as expressed in another country’s currency.
One way to eliminate fluctuations (коливання) in exchange rates is to … their value.
To fix exchange rate, each country may define the worth of its currency in terms of … .
A balance-of-payments deficit is an excess demand for … at current exchange rates.
Government may buy and sell foreign exchange for the purpose of … exchange-rate movements.
Read and dramatize the following dialogue:
A: The demand for foreign currency originates in many ways. First there is a
demand for imported products.
B: In fact to acquire French wines, German cars or Japanese stereo equipment
we need foreign money.
A: Yes, I quite agree with you. Foreign travel by Americans also generates a
demand for foreign currency.
B: Certainly, when you are travelling, you need foreign currency to pay for
transportation, hotel rooms, food and anything else you wish to buy and can
afford. Even if you use U.S. dollars or traveler’s checks, the owner of such
money will exchange them for local money.
A: One can’t but mention that U.S. corporations demand foreign exchange too.
General Motors builds cars in Germany, Coca-Cola produces Coke in China.
In nearly every such case, the US firm must first build or buy some plant and
equipment, using another country’s factors of production. This activity
requires foreign currency and thus becomes another component of our
demand for foreign currency.
B: And what about investment opportunities? It’s of common knowledge that
foreign producers often make direct investments in the USA.
A: For instance Shell and BP gas stations are a familiar example of direct
foreign investment as are Honda in Ohio and Volvo in Virginia. In making
such investments, foreign firms must first demand US currency that can be
used to buy US factors of production.
Make up your own dialogue using the following expressions:
foreign-exchange markets domestic prices
the demand of foreign currency to fix exchange rates
exchange rate flexible exchange rates
to exchange currency appreciation of currency
Unit 7. Systems of Payment. Letter of Credit.
Remember the words:
payment - платіж
payment in advance - попередня оплата
to assure - завіряти, запевняти
settlement of the account - сплата рахунку
outstanding amount (sum) - заборгована сума
to remit - переказувати (гроші)
remittance - переказ (грошовий)
banker’s transfer - банківський переказ
invoice - рахунок-фактура
Certificate of Quality - сертифікат якості
Insurance Policy Certificate - страховий поліс
ATM - банкомат
Letter of Credit - акредитив
irrevocable LC - безвідкличний акредитив