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Sample Research Paper on Foreign Exchange Market

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Sample Research Paper on Foreign Exchange Market

Italy borders Switzerland, Slovenia, Vatican, France and Austria. It goes through a capitalist assorted wealth. The farming district in the souk is extremely competitive. Pioneering and original businesses dominate the market hence provides employments to numerous populace. Tourism too makes component of the chief gainful zone pro the nation. In the year 2014, Italy hosted close to 8.6 million tourists who arrived from European countries and they brought $45.5 billion into the economy. This meant that many businesses as sound as jobs were fashioned right through the era. The lawful tender employed by the domain is Euro. Contrasted to the U.S dollar, Euro plunk at 1 EUR = 1.08852 USD. So, the homeland prevalence is firm to dollar due to the pecuniary activities in the region. This essay deals with foreign exchange market in Italy.

The reasons as to why the country’s prevalence is brawny are outlined below. The primary reason denotes a strong send overseas leaning industrialized sector. The country focuses on utilizing the sell abroad bazaar for lavishness merchandises. Many institutions in the state are accredited for quality products hence they compete in the international market with companies from china. The biggest competitor for luxurious products from the country includes companies in china and Asia. It is due to the employment outlay in these states which is at the lower edge.   In tenure of export business, the realm is categorized as seventh chief homeland in planet. Thus, Italy location in the world operate sector attracts intensive competition from the rest of the globe. Subsequent, the wealth is characterized by diminutive and intermediate industrialized companies. Unlike big economies in the globe, Italy has dynamic and small enterprises that serve the international market. This means that labor activities are optimally develop hence improves the livelihood of populace. In addition, bringing in of vocation happens owing to shortage in diverse divisions. Lastly, tourism is another market basket for Italy and yield revenue that is used in development projects. It is well connected in terms of infrastructural development thus able to create location utility for products manufactured in rural regions. Thus, the products reach the market within projected period hence customers achieves the intended value from consumption of merchandise (Gandal and Halaburda 44).

Italy dealing associates are principally located within Europe. They include the following countries: Spain (7.4%), Germany (12.9%) and France (11.4%). In entirety, the associates comprise a total of 59% in operate activities. In addition, through globalization the Dominion is brilliant to scheme into novel bazaar such as budding Asian souk. Domestic outflow additionally takes a superior share in the development and enlargement of trade in the region. They provide the flea market for goods reproduction locally. At the same time, the country is a member of European Union hence policies developed by the organization to control trade forms part of its business rules. Therefore, global trade is monitored through the application of these regulations. Germany is majorly the shopper of unindustrialized products. On its part, Germany sells motors and other machinery items to Italy. This trade stands at 12.9 percent (Gandal and Halaburda 56).  

There are risks associated with doing business with these countries such as trade restrictions, unhealthy competition and low economic contribution from some countries. In regards to trade restrictions, some countries impose sanctions for entry of certain goods in addition to raising the bar for export standards. This has seen some companies lose business opportunity as well as register losses due to some of the economic decisions made by trading partners. At similar occasion, unhealthy business practices poses several risks to business operations between countries as various countries engages in unlawful behaviors such as Balance of trade inequalities. If a country is economically stable than its partners then it may decide to utilize its stronghold to compete unfairly with members. Lastly, we encompass little benefits from business engagement. In various cases, nations coming together as trade partners may not complement each other in terms of imports and exports. The partnership is deemed to last for a short while due to the fact that there are no economic benefits shared by the members. In most cases, such countries produces similar types of goods hence no need to trade amongst each other (Gandal and Halaburda 40).

Economic projections for the country are determined through assessment of the states potential in utilizing the available resources. Gross home produce is the gauge of all goods produced locally by companies within the state. The country has seen increased GDP in the last four years due to augment in industrialization. In the primary section of monetary cycle 2016, the growth stood at 0.4 percent. This was attributed to positive contribution coming from foreign trade. This assisted equalize the contraction experienced in household command in the primary and subsequent quarter.  By the year 2020, the enlargement is expected to stand at 0.8 percent. On the supplementary elevation, unemployment rate especially in southern province stands at 20.2 %. In the northern region which is considered to be the richest part of the state, unemployment is at 11.9% slightly above the average figure for euro zone. The average for the state is 7.9 % hence need to implement measures to reduce the number of people who are jobless or underemployed. Going forward, the rate is expected to come down to 8.9 percent and below. This insinuates that the population in the north will access jobs while the government will invest in this region. Inflation rates are at 0.2 percent and deemed to increase to 1.8 percent due to regional imbalance in terms of trade. Money supply and demand will also contribute to the situation which is a combination of economic factors such as development and interest rates. Government debt which affects the economic activities is projected to reduce from 131 percent to 122 percent. This will see more economic activities come into play and increases employment opportunities for the population (Selva and Del 90).

The monetary system in place in Italy is European Monetary system. The system was adopted after the collapse of Bretton woods system. It affects business undertakings in the country especially when it comes to imports activities and export of products. The exchange rate is dependent on demand and supply of dollar and Euro in the international market. Due to the application and demand of dollar all over the world, the prices of goods have dynamically changed from period to period. In regards to imports, when dollar price is lower outside the country then imports will reduce while the vice versa is true. The reason behind this is that the purchase of dollar will become an expensive endeavor. In addition, it would be wise for business people to source out their merchandise from within rather than going outside the country. In the event the dollar price goes up due to demand, supply goes down an action that affects business activities (Selva and Del 70). Trade within and outside the border of Italy is greatly dependent on Dollar exchange. This is an indication of the system effect on economic activities. When raw materials coming from outside the state are expensive then the final products will be dear an action that will lead to less demand.

In conclusion, Italy economic machine has been pegged on the small and medium businesses. Banks have also played a very critical role in setting and assisting businesses access funds. The financial infrastructure in Italy is well established and allows the population to transact money both in the stock market and in buying and selling of products. In addition, the financial sector enables agricultural section to conduct its activities. The financing of activities such as agricultural, manufacturing and merchandise businesses is done through the financial system. The economic policies that govern profit- oriented activities in various sectors will either promote or discourage growth. Italy has managed to develop its economic activities through infrastructural growth. There is tremendous growth of various sections such as agriculture which supports trade. The political climate has also enabled and created a favorable business opportunity for people to trade. The goodwill is also important in forming or making business decision and partnering with other traders. In the international market, free movement of goods from one region to the other attracts traders. In case of limitations of trade barriers, traders will show less interest in conducting their daily activities within such an environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Gandal, Neil, and Hanna Halaburda. Competition in the Cryptocurrency Market. Bank of Canada, 2014.

Selva, Simone, and Lucchese F. Del. Supra-national Integration and Domestic Economic Growth: The United States and Italy in the Western Bloc Rearmament Programs 1945-1955. Peter Lang GmbH, Internationaler Verlag der Wissenschaften, 2012.

 

 

 

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