Good day every one and I wish you all a happy new week, I hope you all had a wonderful weekend as well. Today I want us to take our minds back to the basics of trading and exchange.
It is important to note that “No man is an Island”. Trade is an avenue that brings people from different part of the world together. As we all know without trading people would have to be on their own to produce everything he/she needs like clothing’s and luxuries the he/she consumes.
Foreign trade in a lay man’s understanding means the exchange of goods and services between two countries of the world.
For international traders you will understand that countries that do not engage or accepts foreign exchange is a closed economy, while those countries which take part in foreign exchange are known as Open Economy and Nigeria is one of them.
Foreign trade occurs through mutual understanding between countries involved. A good example is Nigeria which produces crude oil sells it to other countries of the world, this means that Nigeria operates foreign exchange and also an open economy.
Now there are reasons for foreign exchange in a country, and these reasons include;
It occurs where there are differences in human and material resources in different part of the world.
In also takes place in countries that mineral resources are readily available.
Also goods and services are exchanged in other for the expansion of purchasing power the countries involved.
Now let’s take a good look at the important of this foreign trade and exchange, foreign exchange allows county to specialize in goods and services it can produce at low cost.
It allows and enables countries involved to enjoy the advantages of economics of scale.
It fosters international relations and enables sharing of climatic conditions, culture and knowledge to other counties, because trade serves as a point of contact to people of different nations.
I hope this post has reminded you of something you might have forgotten about, thanks for going through my blog.
Merci!