ROLE OF BANKING IN INTERNATIONAL BUSINESS

7/30/2019 ROLE OF BANKING IN INTERNATIONAL BUSINESS

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NAME: ASAD ULLAH JATOI

TOPIC: ROLE OF BANKING IN

INTERNATIONAL BUSINESS


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ROLE OF BANKING IN

INTERNATIONAL BUSINESS

Foreign Exchange

Corporate Finance Miscellaneous Banking Services

Role of Commercial banks in

International business


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FOREIGN EXCHANGE

Headline Definition Explains

In order to facilitate international trade anddevelopment, commercial banks convert and tradeforeign currencies. When a company is doing business in

another country it may be paid in the currency of thatcountry.

While some of these revenues will be used to payworkers in that country and for administrative expensesuch as office rent, utilities and supplies, the company

may need to purchase goods from a neighboring countryin that country's currency, or convert cash to its nativecurrency for return to the home office.


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FOREIGN EXCHANGE

Headline Definition Explains Definition of 'Foreign Exchange'

The exchange of one currency for another, or the

conversion of one currency into another currency.

Foreign exchange also refers to the global market

where currencies are traded virtually around-the-clock.

The term foreign exchange is usually abbreviated as

"foreign and occasionally as "FX."


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FOREIGN EXCHANGE

Headline Definition Explains Explains 'Foreign Exchange'

Foreign exchange transactions encompass everythingfrom the conversion of currencies by a traveler at anairport kiosk to billion-dollar payments made bycorporate giants and governments for goods andservices purchased overseas.

Increasing globalization has led to a massive increasein the number of foreign exchange transactions in

recent decades. The global foreign exchange market isby far the largest financial market, with average dailyvolumes in the trillions of dollars.


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Currency swap arrangement with Turkey comes into

force

Example

KARACHI: A three-year bilateral Currency SwapArrangement (CSA) between the State Bank of Pakistan

(SBP) and the Central Bank of the Republic of Turkey

(CBRT) has been implemented from Tuesday, amounting

to $1 billion in equivalent local currencies. This currency swap agreement and an expected

agreement with China will help increase regional trade,

he added. The SBP should actively pursue similar

agreements with Saudi Arabia and Malaysia, from wherewe import a large amount of crude and palm oil, to ease

pressure from its foreign reserves, he concluded.

The News September 5, 2012

Indonesian Rupiah to US Dollar History


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CORPORATE FINANCE

Headline Definition Explains Companies always need to borrow money to cover purchases

of raw materials, machinery parts, inventory and/or payroll.Banks with overseas branches or affiliates can simplify theprocess of corporate finance throughout a company'sorganization by consolidating the transaction procedures,

reporting and record keeping. It is much easier for a company manager to do business in

her own language with a banker located near by who handlesher global business finance needs than it would be for her todevelop banking relationships in every country where she

does business. Her international commercial bank can alsoprovide referrals to professional service firms in othercountries, as well as arrange introductions to other companiesappropriate as customers or for strategic partnerships.


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CORPORATE FINANCE

Headline Definition Explains Definition of 'Corporate Finance'

1) The financial activities related to running a corporation.

2) A division or department that overseas the financialactivities of a company. Corporate finance is primarilyconcerned with maximizing shareholder value through long-term and short-term financial planning and theimplementation of various strategies. Everything from capitalinvestment decisions to investment banking falls under thedomain of corporate finance.


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CORPORATE FINANCE

Headline Definition Explains Explains 'Corporate Finance'

Among the financial activities that a corporate finance

department is involved with are capital investment decisions.

Should a proposed investment be made? How should the

company pay for it; with equity or with debt, or combination

of both? Should shareholders be offered dividends on their

investment in the company? These are just some of the

questions a corporate financial officer attempts to answer on

a consistent basis. Short-term issues include the management ofcurrent assets

and current liabilities, inventory control, investments and

other short-term financial issues. Long-term issues include

new capital purchases and investments.


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MISCELLANEOUS BANKING SERVICES

Heading Picture Corporate checking accounts, currency specific

credit cards and lock boxes are also offered bycommercial banking to help make foreign tradepossible for a company.

Lock boxes are particularly helpful for collectingpayments from overseas customers andreporting receipts daily for cash managementpurposes. Currency-specific credit cards are also

important in eliminating the cost of crosscurrency purchasing, which normally is done atexpensive valuation levels.


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MISCELLANEOUS BANKING SERVICES

Headline Picture


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Role of Commercial banks in International business


Banking section plays important role in internationalbusiness. Today almost all major banks have offices inmajor cities around the world. Many banks haveformed collaboration with banks in other countries to

better serve their international business community. Banks form a bond of trust between buying and selling

transactions in international market. For individualbanks offer services like foreign exchange, travelers

check, electronics transfer. For businesses bank plays arole of trusty agent by offering services likeDocumentary Collection and Letter of Credit.


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Banking section plays important role in internationalbusiness. Today almost all major banks have offices inmajor cities around the world. Many banks haveformed collaboration with banks in other countries to

better serve their international business community. Banks form a bond of trust between buying and selling

transactions in international market. For individualbanks offer services like foreign exchange, travelers

check, electronics transfer. For businesses bank plays arole of trusty agent by offering services likeDocumentary Collection and Letter of Credit.


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One of the problem international businesses encountering doingbusiness internationally is lack of trust. With the help financial

devices commercial banks are able for a bond of trust between

internationals buyers and sellers. In commercial methods like

Commercial Collection and Letter of Credit banks act as agents to

handle payments as well as relevant documents. Letter of Credit is

most wide acceptable and used method of doing international

transactions. Some banks and government agencies offer export

credit insurance to businesses. In some cases, exporter has to for

go a letter of credit, in such cases banks offer export credit

insurance.

Banking sector plays vital role of catalysts in international

market. Due to technology advances in banking sector,

communication gap and delays in international business have really

narrow down a lot.


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ROLE OF BANKING IN INTERNATIONAL BUSINESS

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