Foreign Market Vs Domestic Market

Foreign ExchangeMarket Vs Domestic Market

 The foreign exchange market refers to trading that occurs outside the borders of a country or involving parties/products that are in different countries. Domestic market refers to trading within one's border. The operations of the two markets differ in the following ways; first and foremost, the domestic market is governed by the laws of the government of the land as opposed to the foreign exchange market which is governed by international law and to some extent the laws of the two countries. Secondly, in the domestic market, the local currency is the main means of exchange while in the foreign exchange market more than one currency is used. In addition to that, the foreign exchange market covers a wider geographical error compared to the domestic market which is limited to the countries border.

Factors Affecting Price Charged in Foreign Market.

Foreign exchange rates: Foreign exchange rate refers to the rate in which one country's currency equates to that of another in terms of the value. One country's value is higher than that of another it makes importing goods and services from the country with a weaker currency cheap and buying from the stronger currency expensive.

Economic Conditions: Economics conditions such as inflation and economic growth of the countries involved also have an impact on the prices in the foreign market. In times of inflation, the prices of goods go up and one will need more money to buy goods and services. Economic growth means that people have more money to spend which increases the demand for goods and services.

International Business Environment: The international business environment comprises of the political, ecological, sociocultural, technological, legal and economical environments in the foreign markets. For example, political uncertainty in a country will push the prices of goods up due to fear. On that same note, one can only trade within a country's rules and regulations. This means that if a country decides to change its tax plans and subsidies on a particular good, the prices will either go up or down (Arosanyin).

Check also Internal Business Environment