The price of commodities in a country affects

  • No School
  • AA 1
  • 5

This preview shows page 2 - 4 out of 5 pages.

of the currency. The price of commodities in a country affects exchange rates by altering investment patterns and the performance of the entire economy. Policies that lead to expansion of investment and economy boosts the value of a country’s currency against those of other nations, which eventually alters the exchange rates. Other factors that influence exchange rates include policies, which enable the growth of the economy ( Hill, 1993). These policies may create an enabling environment for investors in the country by reducing taxes and availing infrastructure. Growth in the economy results in to increase in currency value, relative to other countries in the exchange market. Furthermore, appreciation of the Real against the U.S. dollar was a mixed bag for Embraer, as it realized positive and adverse impacts altogether. The Brazilian currency, Real,
Image of page 2
EXCHANGE RATES AND ITS IMPACTS ON BRAZIL 3 appreciated steadily against the U.S. dollar between 2004 and August 2008. When the Real appreciated, the cost of raw materials bought from outside the country is less ( Baer & Love 2017). For instance, Embraer purchased jet parts at a lower cost since the Real had appreciated against the U.S. dollar at that time. On the contrary, appreciation of local currency may negatively impact the sales, where products’ prices are stated in foreign currency. As a requirement for aircraft manufacturers globally, jet parts were priced in U.S. dollars at Embraer
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 5 pages?

  • Fall '19
  • Exchange Rate, Foreign exchange market, United States dollar

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors