Market Forecast

Introduction

As business becomes more increasingly global, it's very important that countries pay close attention to foreign exchange exposures in order to design ways of implementing appropriate strategies to properly deal with these types of exposures. In this paper I will attempt to forecast the degree of transaction, translation and the economic exposure for Russia. I will follow that by forecasting the degree of these specific areas and analyzing the various techniques used to mitigate these exposures. The goal of this paper is to identify a few concepts of transaction, translation, and economic exposure for international operations in Russia.

Economic Exposure

It is conventional to classify foreign currency exposures into three types. The first is what is known as Economic Exposure. Economic Exposure is defined as the extent to which the value of the firm would be affected by unanticipated changes in exchange rates. Any anticipated changes in exchange rates would have been already discounted and reflected in the firm 's value. Changes in exchange rates can have a profound effect on the firm 's competitive position in the world market and thus on its cash flows and market value. (McGraw Hill, 2003). Changes in the exchange rate will also affect how a country forecast its dollar value. How has Economic Exposure affected Russia recently? In the Russian newspaper, Gateway To Russia, in March of 2004 it reported that the US dollar rose despite forecast. This was the reaction of traders to the dollar's strengthening on the world market. However, there is little optimism about

the American currency both in Russia and abroad. The newspaper reported that according to market traders, the dollar would weaken soon....

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...monetary method is that monetary accounts have a similarity because their value represents a sum of money whose currency equivalent after translation changes each time the exchange rate changes. Under the temporal method, monetary accounts such as cash, receivables, and payables are translated at the current exchange rate and under the current rate method; all balance sheet accounts are translated at the current exchange rate, except for stockholders 'equity.

Conclusion

In this paper I have attempt to forecast the degree of transaction, translation and the economic exposure for Russia. I followed that by forecasting the degree of these specific areas and analyzing the various techniques used to mitigate these exposures. The goal of this paper was to identify a few concepts of transaction, translation, and economic exposure for international operations in Russia.