Understanding Risk - Currency Volatility
At first glance, one would think that a countries politics would not affect how businesses operates on a daily basis, but if one were to look at it from a macro perspective, a countries stability in politics actually affects businesses in a major scale. One of the major factors that can affect a business, especially those that outsource globally is the currency volatility. Imagine a business that relies heavily on sourcing its raw materials from a different country and one day out of no where, the currency of the country its buying from increases by 20%, this would become an outright disaster for the company expenses and the company can do nothing to affect this as the prices agreed upon is still the same, because the currency of the country you're from has dropped or the other country currency has continuously become stronger. It is important to note that having a stable currency for your own countries currency is not enough as depending on the country you're buying from, the ...