Explain the concept of countertrade

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Reference no: EM13154749

1. Why does the European Central Bank's policy affect the United States in general and the U.S.'s exchange rate in particular?

2. Suppose that you are currently working for a firm dealing with international business. The firm expects to receive 1 million euro 90 days from now and 3 million Mexican pesos 6 months from now. Your boss in the U.S. is worried that exchange rates may change within the next few months and reduce your firm's dollar profits.

A.) Would an appreciation or depreciation of the dollar reduce your firm's dollar profits?

B.) What specific actions would you suggest to your boss to avoid this risk?

3. Explain the concept of countertrade. When does counter trade make sense? How does counter trade help solve the nonconvertability problem?

Reference no: EM13154749

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