Assessment on the exchange rate in Brazil

Introduction of the exchange rate in Brazil

In this task, there is brief information about the exchange rate. For that case, the selected country is Brazil. According to this country, the exchange rate will be analyzed and with different exchange rate strategies. Moreover, after this in the next section there is comprehensive details about the strategy for entering a foreign market. This will discuss some important strategies for entering into this market professionally. In the end, there is some information about the staffing policy for the exchange rate. It is extremely sensitive matter for the country, if there is some defects in the staffing then country may suffer from economic losses.

Exchange rate:  It can be observed that exchange is considered as the value of one country’s currency compared with the currency of other country according to economic zone. This can be explained with the help of an example. How much US dollars are required for buying Euros. The exchange rate of Euro is about 1.20 dollar. This shows that it will take 1.20 dollar to buy only one dollar.

On the other hand, it can be noted that some of the exchange rates are also known as free-floating. This is because the rate may be rise or fall according to the demand and supply of dollars in the market. Another thing is that some currencies are not categorized in the free floating because it contains some restrictions. There are about different types of exchange rates.

The first one is free floating. This type of currency can be rise and fall according to the change in oversees exchange market (Deresky, 2014).

The second one is related to restricted currencies. There are some countries that contains restricted currencies. This is because they are applying limitation on the exchange rates within the country borders.

The next type is about currency peg. It occurs whenever any country is pegging its currency to another country. This means that the Hong Kong dollar is being pegged to different country with the range between 7.75 and 7.85. This means that the value of this dollar with that country will remain same at this rate.

The next type is related to offshore vs onshore exchange rate. This shows that the exchange rate of any country will be different. This exchange rate can be categorized according to onshore and offshore rate (Daniels, 2014).

The next exchange rate type is related to spot vs forward. It can be noted some exchange rate is also known as cash value and spot rate and it is according to the current market value. The alternative way is that the exchange rate also contain forward value and it is totally based on the expectations. On the other hand, these forward values may be fluctuate according to the change in expectation with the future interest rates with different countries.

Exchange rate of Brazil

The exchange rate of Brazil according to dollar is about 0.21 dollars. This means that 1 Brazilian real is equal to 0.21 US dollars. On the other hand, 1 US dollar is about 4.87 Brazilian Real (Czinkota, 2011). 

Exchange rate strategy in Brazil

There are some exchange rate strategies used by Brazil, for forecasting the exchange rate.

The first one is related to purchasing power parity. It is also considered as most powerful method due to indoctrination in the economic textbooks. It can be noted that this approach is completely based on the theoretical law of one price. It shows that the identical products present in different countries must contain identical prices (Shenkar, 2008).

The next strategy is related to the relative economic strength. This strategy is according to the economic growth in different parts of the world. Through this strategy Brazil is able to forecaste the direction of exchange rates. On the other hand, the rationale present behind this approach is completely based on the idea of strong economic environment. Through this structure, Brazil is able to attract investors from around the world.

The next strategy is related to the econometric models of forecasting exchange rates. It is considered as common method for forecasting the exchange rate for Brazil. For that case, there are some factors used for econometric models. These factors are based on the economic theory. Through the help of any variable it will become easy to change the impact of exchange rate (Griffin, 2010).

Strategy for entering a foreign Market in Brazil

There are a lot of strategies for entering into the foreign market. The first on is related to the franchising of your brand. This means that if brands in Brazil can franchise their different brand then it will become simple to enter in the foreign market  (Hill & Krishna, 2017).

The next strategy is related to direct exporting. This means that if Brazil increase the rate of exports then they can enter in this market perfectly. This country can also use joint ventures for entering in this market. On the other hand, the next strategy is related to the buying the company. This means that if Brazil has extra ordinary investors then they will buy the foreign company for entering in this market.  

Staffing policy in Brazil

For managing the exchange rate in Brazil, this country is using different kind of staffing polices for human resource management.

The first one is related to Ethnocentric staffing approach. For that approach international strategic appropriateness is used. The main advantage is that it can easily overcome the lack of qualified managers present in Brazil. The main disadvantage of this strategy is that it will produce resentment in this country (Daniels, 2014).

On the other hand, the next approach is related to Polycentric. According to this approach, Localization is used as strategic appropriateness. The main advantage of this approach is that it will alleviate the culture of myopia. Moreover, its disadvantage is that it will apply limit on the career mobility. Due to this it will isolates headquarters from the subsidiaries present outside the country (Czinkota, 2011).

References of the exchange rate in Brazil

Czinkota, M. (2011). International Business. John Wiley and Sons, Ltd.

Daniels, J. &. (2014). International Business: Environments and operations. Prentice Hall, Inc.

Deresky, H. (2014). International Management: Managing Across Borders and Cultures, Text and Cases. Pearson Education Ltd. .

Griffin, R. W. (2010). International Business, 6th Edition. Prentice Hall: USA.

Hill, C. w., & K. U.-h. (2017). Global Business Today Global Edition . Tenth Edition, McGraw-Hill Education.

Shenkar, O. a. (2008). International Business. John Wiley and Sons.