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Need help with my writing homework on Currency Exchange as a Key Instrument of International Commerce. Write a 2500 word paper answering; The globalization movement created a greater need to determine the equivalent valuation of monetary units also referred to as the exchange rate in order to execute a trade of goods among nations. Currency exchange is the trade value of one unit of currency into another currency which is required to facilitate the trade of goods and services among nations. For example, as of January 9, 2008, the currency exchange market value of one Euro was 1.47 US dollars (Yahoo, 2008). The exchange is a market mechanism that is very instrumental in the monetary policy of the nation. Both the developing nations and a developed nation must instill a sound monetary unit strategy to create a stable currency that is both liquid and valuable in the market. It is harder and more critical for a developing nation to find currency exchange stability. The reserve of developing nations is smaller than in solid economies thus these economies are in need of foreign exchange strategy that minimizes the risk of inflation or devaluation of the currency.&nbsp.

&nbsp.A strong currency enables a nation to acquire more goods for the same price. The entire economy of the nation is affected by fluctuation in exchange rates. Among the industry of a country that is influenced by fluctuation in exchange rates are tourism, finance, investment and trade of durable goods (Frieden). The stakeholders that are responsible for making the foreign exchange market work are the large commercial banks. The foreign exchange markets are a global telecommunication network among large commercial banks which serve the purpose of being an intermediary for the exchange of currency between two parties (Madura, 1990). The precise rate at which a currency is traded for an immediate conversion is called the spot exchange rate. The foreign exchange systems have evolved a lot in a few decades. In the 20th century, the period covering from 1944 to 1971 was referred to as the Bretton Woods era. During this era, the national increase of the marketplace was responsible for determining the exchange rate value relationship among different national currency.&nbsp.&nbsp.