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NAME: ASAD ULLAH JATOI

TOPIC: ROLE OF BANKING IN INTERNATIONAL BUSINESS

ROLE OF BANKING IN INTERNATIONAL BUSINESS


Foreign Exchange Corporate Finance Miscellaneous Banking Services Role of Commercial banks in International business

FOREIGN EXCHANGE

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In order to facilitate international trade and development, commercial banks convert and trade foreign currencies. When a company is doing business in another country it may be paid in the currency of that country. While some of these revenues will be used to pay workers in that country and for administrative expense such as office rent, utilities and supplies, the company may need to purchase goods from a neighboring country in that country's currency, or convert cash to its native currency for return to the home office.

FOREIGN EXCHANGE
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Definition of 'Foreign Exchange' The exchange of one currency for another, or the conversion of one currency into another currency. Foreign exchange also refers to the global market where currencies are traded virtually around-the-clock. The term foreign exchange is usually abbreviated as "foreign and occasionally as "FX."

FOREIGN EXCHANGE
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Explains 'Foreign Exchange' Foreign exchange transactions encompass everything from the conversion of currencies by a traveler at an airport kiosk to billion-dollar payments made by corporate giants and governments for goods and services purchased overseas. Increasing globalization has led to a massive increase in the number of foreign exchange transactions in recent decades. The global foreign exchange market is by far the largest financial market, with average daily volumes in the trillions of dollars.

Currency swap arrangement with Turkey comes into force KARACHI: A three-year bilateral Currency Swap Arrangement (CSA) between the State Bank of Pakistan (SBP) and the Central Bank of the Republic of Turkey (CBRT) has been implemented from Tuesday, amounting to $1 billion in equivalent local currencies. This currency swap agreement and an expected agreement with China will help increase regional trade, he added. The SBP should actively pursue similar agreements with Saudi Arabia and Malaysia, from where we import a large amount of crude and palm oil, to ease pressure from its foreign reserves, he concluded. The News September 5, 2012 Indonesian Rupiah to US Dollar History

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CORPORATE FINANCE

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Companies always need to borrow money to cover purchases of raw materials, machinery parts, inventory and/or payroll. Banks with overseas branches or affiliates can simplify the process of corporate finance throughout a company's organization by consolidating the transaction procedures, reporting and record keeping. It is much easier for a company manager to do business in her own language with a banker located near by who handles her global business finance needs than it would be for her to develop banking relationships in every country where she does business. Her international commercial bank can also provide referrals to professional service firms in other countries, as well as arrange introductions to other companies appropriate as customers or for strategic partnerships.

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Definition of 'Corporate Finance' 1) The financial activities related to running a corporation. 2) A division or department that overseas the financial activities of a company. Corporate finance is primarily concerned with maximizing shareholder value through longterm and short-term financial planning and the implementation of various strategies. Everything from capital investment decisions to investment banking falls under the domain of corporate finance.

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CORPORATE FINANCE
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Explains 'Corporate Finance' Among the financial activities that a corporate finance department is involved with are capital investment decisions. Should a proposed investment be made? How should the company pay for it; with equity or with debt, or combination of both? Should shareholders be offered dividends on their investment in the company? These are just some of the questions a corporate financial officer attempts to answer on a consistent basis. Short-term issues include the management of current assets and current liabilities, inventory control, investments and other short-term financial issues. Long-term issues include new capital purchases and investments.

MISCELLANEOUS BANKING SERVICES

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Corporate checking accounts, currency specific credit cards and lock boxes are also offered by commercial banking to help make foreign trade possible for a company. Lock boxes are particularly helpful for collecting payments from overseas customers and reporting receipts daily for cash management purposes. Currency-specific credit cards are also important in eliminating the cost of cross currency purchasing, which normally is done at expensive valuation levels.

MISCELLANEOUS BANKING SERVICES


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Role of Commercial banks in International business

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Banking section plays important role in international business. Today almost all major banks have offices in major cities around the world. Many banks have formed collaboration with banks in other countries to better serve their international business community. Banks form a bond of trust between buying and selling transactions in international market. For individual banks offer services like foreign exchange, travelers check, electronics transfer. For businesses bank plays ar ole of trusty agent by offering services like Documentary Collection and Letter of Credit.

Role of Commercial banks in International business

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Banking section plays important role in international business. Today almost all major banks have offices in major cities around the world. Many banks have formed collaboration with banks in other countries to better serve their international business community. Banks form a bond of trust between buying and selling transactions in international market. For individual banks offer services like foreign exchange, travelers check, electronics transfer. For businesses bank plays a role of trusty agent by offering services like Documentary Collection and Letter of Credit.

Role of Commercial banks in International business Headline

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One of the problem international businesses encountering doing business internationally is lack of trust. With the help financial devices commercial banks are able for a bond of trust between internationals buyers and sellers. In commercial methods like Commercial Collection and Letter of Credit banks act as agents to handle payments as well as relevant documents. Letter of Credit is most wide acceptable and used method of doing international transactions. Some banks and government agencies offer export credit insurance to businesses. In some cases, exporter has to for go a letter of credit, in such cases banks offer export credit insurance. Banking sector plays vital role of catalysts in international market. Due to technology advances in banking sector, communication gap and delays in international business have really narrow down a lot.