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Decreasing Exchange rate between PHP and AUD and Multinational Cooperation

Decreasing Exchange rate between PHP and AUD and Multinational Cooperation. Increase investment in Philippine. Encounter a lower overhead if invest earlier and generate more profit in long as the PHP becomes more valuable relative to AUD

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Decreasing Exchange rate between PHP and AUD and Multinational Cooperation

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  1. Decreasing Exchange rate between PHP and AUD and Multinational Cooperation

  2. Increase investment in Philippine Encounter a lower overhead if invest earlier and generate more profit in long as the PHP becomes more valuable relative to AUD Lower the risk of exchange rate – less likely to be affected by exchange if the AUD is not depreciated, a decrease in exchange rate between the two currencies indicates that the economy condition in Philippine is developing  bright development progression  Profitable outcome

  3. How to adjust the investment? Conduct local market research (eg. Appointing executives to the local market) Recruit local market analysts since they are more familiar with the local market

  4. Importation Discourage importation Why? Higher product price, lower demand

  5. Decisions Decrease its import from Philippine and find some alternative source country that is economical. Change source country may be necessary Negotiation with business partners  promising to import certain amount in return for a discount Maintain certain profit level  adjust the price of products that are imported from Philippine

  6. Export and Exchange rate Encourage Export Why? Products become cheaper, increased demands

  7. Decisions Figure out a more effective operating process in order to meet the increased demand Hire more workers to keep up with the larger workload Wage expense is increased  why? Labors in Philippine cost more as the PHP becomes more expensive relative to AUD  determine whether to recruit people from other countries.

  8. Treasury Department Can take advantage of the rising currency Despite the exchange rate is forecasted to be decreasing through the whole period, it is still possible to fluctuate in reality What to do?

  9. Currency option contract vs Currency forward contract Currency option contract gives the contract holder the right to buy or sell the currency at a specific price and quantity in a future date Currency forward contract gives the contract holder the obligationto buy or sell the currency at a specific price and quantity in a future date

  10. Currency option contract Currency option contract is preferable since the company is no obliged to sell the PHP if the currency depreciate significantly in the future

  11. Currency option contract The company can make profit through buying the PHP in the early period when the exchange rate is relatively high and sign a currency option contract to sell the PHP in a later time when the currency becomes more valuable.

  12. Thank you .

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