International Finance Case Study Example | Topics and Well Written Essays - 1500 words

International Finance - Case Study Example One of the ways through which persistently weak currencies can be stabilized is by use of the preexisting currency. This implies that the government can employ microeconomic policies in order to ensure that the currency regains its value. For example, central banks should ensure that money supply is closely monitored to avoid inflation. Other instruments that can be used to regulate money supply include open market operations, discount rate and reserve requirements among others. Most importantly, the interest rates should be controlled to ensure that the public do not excessively borrow an aspect that can result to increase of the money in circulation and inflation. Another way of solving the problem of persistent currency is introducing a new currency. This implies that the central banks should hire experienced economic analysts in order to study the implication of generating new currency. It is vital to note that due to dire causes of making new uncontrolled currencies including hy perinflation, it is essential that government should first use all the available microeconomic policies before embarking on introducing a new currency. Vietnamese Dong among other weaker currencies can also be stabilized by borrowing foreign currencies (Ellen, 2012). Most of the countries with weak currencies usually borrow US dollars in order to ensure that the value of their currencies is maintained at an appropriate rate. While all the three ways are important, the best approach that a government can use depends on political situation. Most importantly, the three approaches should be able create a domestic market, increase reserves and strengthen the existing institutions. By importing or exporting to a foreign country such as Thailand, Blades is able to benefit in various ways. First, the company is able to import the products that it is facing difficulties in producing. Based on the high costs of production that Blades is facing in the US market,