Change in Own Theories of International Finance

There has been a significant change in my own theories of international finance since the beginning of this course. For instance, I now know that both monetary and fiscal policies are very useful in decision making in the global capital markets. In addition, I can now explain the impacts of appreciating and depreciating United States dollar on the economy of a country and those of its trading partners. With these changes, I can now apply theories of international finance in making relevant investment and financial decisions.

The three most important concepts that I have learnt in order of importance include exchange rates, interest rates, and balance of payments. As far as exchange rates are concerned, I now understand why countries need to know how the strengths of their currencies are fluctuating against the dollar. Furthermore, knowledge of interest rate concept helps to guide countries on how they can prevent inflation. With respect to balance of payment, I have learnt why it is important to keep records of all international transactions that are taking place between two or more trading nations (Suranovic, 2012).

Cruz and Palin (2014) reflect current event in the field of international finance. According to Cruz and Palin (2014), President Barack Obama has just issued an order to the Federal Reserve to adopt the euro by mid-December 2015. The President has recognized that the new system will guide America and other countries to compare their prices and to stabilize their economy. The course concept that I feel is the most relevant for the industry today is exchange rates because it assist countries to understand the impact of foreign exchange fluctuations on international companies.


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