Globalization has facilitated international trade; when an organization is considering an international market venture, it should enact strategic policies to facilitate its successful entry. International trade prevails through the operations of absolute and comparative advantage paradigms; however, the trading partners need to have a standard currency of payment. Since the world has not developed a common currency, the trading currency in the event of trade between two or more countries is the currency of the receiving country. With the trend, countries maintain a foreign exchange system mandated with the role of exchanging local currencies to foreign currency at predetermined rates to facilitate trade. Other than traders buying foreign currency with local currency, they are also able to exchange foreign currency for local currency. This paper evaluates the academic and professional growth of global foreign exchange.
The foreign exchange market can be traced from the world economic operations of 1955-1970 where exchange rates were pegged according to the specification of Breton Woods’s system. Before then there was no standard measure that would allocate the value of a certain currency; there were other weaker frameworks that had been enacted by the international monetary order of 1944 but they added minimal value to the then foreign exchange system. Since the introduction and collapse of the Breton Wood system, there have been continuous changes in the foreign exchange system where parties to the dealing are using guidelines from international monetary fund’s and world bank to peg their currency.
In 2004, the global foreign currency transactions were expected to have reached $1.9 billion and on the side, there were $1.2 billion trading in the form of futures and options. The topic of international financial management continues to get fueled by the state of international trade where trading partners are willing to engage in professional undertakings to increase their gains from the trade.
Since the introduction of the foreign markets, academicians and scholars have been researching the topic; they aim at determining the forces and the trends that the global market is undertaking. With the move, they are writing researched material on how certain aspects are affecting the market and vice-versa. The twenty-first century has seen fast growth in globalization and international trade, with the new wave of change, scholars are writing about the materials as they advise traders and countries on the right way to invest in the global markets. International trade has become a subject of writing and the new waves taking place in the market offer more need to scholars and professionals to write about. When writing and offering their professional advice on trends in the market, international trade writers have no option that considers the operations of the foreign exchange market. International trade has brought the need to have efficient monetary systems that can maintain a healthy balance of trade among the trading countries. The system and workings of the international balance of trade have become the topic of focus by many scholars as they seek advice and remedy to depreciated states that their economies suffer.
When making fiscal and monetary policies, policy-makers have to consider the effect that the policies will have on their currency; to make effective and rewarding policies, professionals’ and academicians’ inputs are crucial. Governments are deploying economists and financial management experts to assist them to make decisions especially when it comes to the foreign exchange market.