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Name of student: Lại Thị Huyền Trà Class: BAK9 ID: DTQ1953401010107

This document contains information about a student named Lại Thị Huyền Trà, including their class, ID, and a case study on developing export markets. The case discusses how exporting can benefit countries with weak currencies by making their goods cheaper overseas. It also provides advice to Rwanda's government to increase exports, such as improving industries, research and development, labor competitiveness, logistics, trade promotion, and workforce training.

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43 views3 pages

Name of student: Lại Thị Huyền Trà Class: BAK9 ID: DTQ1953401010107

This document contains information about a student named Lại Thị Huyền Trà, including their class, ID, and a case study on developing export markets. The case discusses how exporting can benefit countries with weak currencies by making their goods cheaper overseas. It also provides advice to Rwanda's government to increase exports, such as improving industries, research and development, labor competitiveness, logistics, trade promotion, and workforce training.

Uploaded by

Huyền Trà
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name of student : Lại Thị Huyền Trà

Class : BAK9
ID : DTQ1953401010107

CASE 4.1. DEVELOPING EXPORT MARKETS


Questions
1. Comment on the statement that “exporting maximizes the benefits of selling
from countries with weak currencies.”
A soft currency is a currency that has a low demand, but a high supply, in the
foreign exchange market. The position of a weak currency is often associated with
an economically weak country, with a large deficit in the balance of payments. The
supply of this currency is sufficient to pay for the purchases of imports, but the
demand for the currency is relatively weak because the amount needed to purchase
exports is relatively small. However, in theory, in a floating exchange rate regime,
supply and demand should balance each other through the depreciation of a weak
currency.
Factors affecting the foreign exchange rate
Forming foreign exchange rate is a complex interrelated process of the economy,
politics of the country and the world, so there are many different factors affecting
the exchange rate:
1. Inflation level. An appreciation in a country leads to a decrease in the
purchasing power of its currency, thereby depreciating the currency.
2. Interest rate. The central banks of countries have an important impact on the
exchange rate of their own currencies through changes in the refinancing
rate. When interest rates rise due to a tightening of a country's credit and
fiscal policy, that country's currency appreciates, but if interest rates rise due
to high inflation, the currency depreciates.
3. Balance of payments. A country's balance of payments is the movement of
money in the form of payments it receives and pays out. When a country has
a positive balance of payments, the demand for that country's currency
increases, strengthening its exchange rate, and vice versa when the balance
of payments is negative.
4. The competitiveness of a country's goods on the world market. High
competitiveness helps to increase the export volume of the country, increase
the source of foreign currency and increase the exchange rate of the
domestic currency.
5. Speculative currency transactions and activities of financial institutions. If
the exchange rate of a currency for some reason falls, large financial
institutions will try to balance currency risk by selling that currency, which
further weakens its position in the market. Forex.
6. Prices of fuel and other raw materials. If a country's economy is not
diversified and depends mainly on the export of a raw material, then when
the price of that commodity (oil, gas, gold, etc.) country also decreased.
In addition, foreign exchange rates are also affected by political situations in other
countries, wars, and natural disasters. Often the basic news suddenly occurs,
causing panic in the crowd, causing the exchange rate to fluctuate sharply, then
stabilize at a new level.

2. Based on the information provided, what is your advice to the government


of Rwanda to increase exports?
Rwanda is a rural country with about 90% of the population living on agriculture
(mostly subsistence). The country is located inland with very few natural resources
and industrial infrastructure.[45] The main export items include coffee and tea, in
recent years there have been more mineral products (mainly Coltan, used in the
manufacture of electronics and telecommunications equipment such as mobile
phones) and flowers. Tourism is also a sector with good growth, mainly ecotourism
(Nyungwe Forest, Lake Kivu) and the world famous and endemic gorillas in
Virunga Park. The country has a low Gross National Product (GNP) and was once
considered a High Indebtedness Poor Country (HIPC).
1. Improve the technical level of the mechanical engineering industry, creating
a foundation for transition to industries with higher levels of sophistication
and opportunities for diversification. Promote the development of supporting
industries, contributing to increase the proportion of domestic production
value...
2. Improve the export capacity of software products and services, digital
content, finance, tourism...
3. Promote research and development (R&D); develop supporting industries to
raise the localization rate. Attracting and supporting investment projects in
high technology and supporting technology for electrical - electronic
products.
4. Enhancing the competitiveness of labor-intensive traditional export clusters.
Developing input supply markets including raw materials for production and
value-added services.
5. Completing the city's logistics cluster development strategy.
6. Improve the efficiency of investment and trade promotion associated with
typical export products and goods in the context of international economic
integration.
7. Coordinate with research institutes, institutes... to train and develop high-
quality human resources

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