International finance is a finance sector that studies the problems related to transactions involving currency transactions or in any case currency questions. It involves companies, financial markets, institutions, and financial intermediaries operating on international markets.
Firms operating on international markets transact in foreign currency when, for example, they sell to firms that pay in foreign currency, or buy goods and services by paying for them in foreign currency. When the regulations of such transactions are different over time, the company is exposed to an exchange risk from which it can hedge itself with a range of currency derivatives.
More complex problems arise when deciding how to finance investments abroad.…Continue reading