Term Paper Ib

International Business Management

(IBM 412)

Lecturer: Senior lecturer Mr. P.J. Jayathilaka St. Name: K.K.J.R.Samarasekera 03/MS/072 4th year 1st semester

FACULTY OF MANAGEMENT STUDIES DEPARTMENT OF BUSINESS MANAGEMENT SABARAGAMUWA UNIVERSITY OF SRI LANKA

CONTENT

this assignment successfully.

and his guidance to complete

for giving this opportunity

Mr. P.J. Jayathilake,

humble thanks to my lecturer

I would like to give my

Acknowledgement

International financial management Global financial system International institutions

Managing foreign exchange How do central banks manage exchange rates? Why exchange rates? What determines the exchange rates? Why exchange rates are important? Direct foreign exchange Market participants Financial instruments Main currencies used in foreign exchange:

Bills of exchange Characteristics of Bills of exchange Forfeiting How forfeiting Works in International Trade Documentary Requirements Letter of credit Elements of a Letter of Credit Factoring International financial market Market participants Purpose of financial market Direct foreign investment

Introduction

For four straight years the global financial system has shown impressive resilience. During the past six months in particular, markets have not been easy to intimidate. Global imbalances have widened oil prices have raised strongly, hurricanes have struck, and turmoil has developed in U.S. credit derivative markets. Political uncertainty has increased in some emerging economies. Solid economic growth, combined with low inflation, low bond yields, and cheap credits, has bolstered current financial stability. These are all essential factors that customarily sustain international financial markets and have done so through this cycle. Global financial system is facing a recession since last year. Developed countries like USA, UK, and Singapore are the most affected countries from this situation. Not only develop countries but also developing countries also has affected this indifferent manner. This is negative effect of globalization and international trade. Increase of oil prices, bankrupt of banks, higher inflation, unemployment and other negative effects has reduce countries growth rates. International trade and global financial system has become more complex and WTO, IMF, and