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Business Question.docx - EXCHANGE RATES 1 Question 1 I...

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EXCHANGE RATES 1 Question 1 I would advise the client that the expected value of the currency would decrease. Firstly, this would be as a result of inflation, which is the rise of prices of commodities such as the rise of soft drinks. A higher inflation usually means that there would be depreciation of the currency among the trading partners. Secondly, a shrinking economy would also mean would mean that would be current account deficits and that the country would be spending more on its foreign trade than its earning. In addition, the economy would not be having sufficient money to be used for public debt. Lastly, if businesses are moving out of the country, it would mean that the economic performance and the political stability of the new country would have declined hence prevent effective performance of that economy. Political and economic turmoil usually affects how a business performs against its competitors. Question 2 The company would be advised to increase its exports to Japan in order to gain more of
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