By Nicole Bush
For my two countries to export and import to and from, I chose to work with
Japan and Italy. I looked up the information for both of their currencies which are Yen
and the Euro. The product that I chose to export to these two countries is diamonds, and I
chose to import from them designer handbags. I watched the currency exchange rates on
October first and then again on October seventh, and I will show my finding below.
The business deal I made with Japan and Italy was to export to them on October
first $240,000 worth of diamonds. My transportation of the diamonds was my only
expense which cost me $10,000 to get them there, leaving me with asking them to pay me
$250,000 in their respective currencies. I am selling them the diamonds at my cost in
order to get a cheaper price on their handbags. Then on October seventh, with the
$250,000 they gave my, I am going to purchase that amount of handbags in their
respective currency and turn them for a large profit, however I hadn’t accounted for any
fluctuation in currency values.
The first company we will examine the exchange rates for will be Japan. On
October first I sent them the diamonds and with transportation fee this gave me $250,000
which translated to 20,840,905 Yen since the exchange rate that day was 83.36362. Then
on October seventh I was expecting to get that amount back in handbags but the value of
the Yen went down to 82.53112 leaving me getting 20,632,780 yen worth of handbags
instead. If I divide that number by the original exchange rate I get $247,503.40 which
means I lost approximately $2496.60 American dollars in designer handbags that I
expected to get and sell at a profit.
Now we will examine the effects of the exchange rates with Italy. On October
first I sent them the diamonds and with transportation fee this game me $250,000 which