International trade – Sanctions or Currency – which works?

Economic sanctions have been a part of the foreign policy tool and are seen as a choice for the countries to yield higher results. Sanctions can be unilateral or multilateral. It may be perceived that sanctions help achieve the goals of a country, but they have failed to do so in many cases. Sanctions have worked well in South Africa and have a mixed record. It is the currencyspeculators that benefit significantly from these sanctions. When sanctions are imposed, the poor suffer the most in a country. Trade sanctionis seen to be effective in certain cases, as it involves goods which are prohibited from being imported into the country. Chinais making a move towards compliance with the UNsanctions against North Koreaand has taken steps to abandon the long term alliance with Pyongyang.

There is also a knock-on effect on the trade and investment between impacted nations due to the imposition of sanctions. It is not unusual to have sanctions imposed on a country which has a large foreign exchange reserve. Sanctions are a challenge at being effective in a world of alternative currencyarrangements. In case of international trade, it can be rightly said that currencyworks over sanctions. International trade is heavily dominated by the prevailing exchange rates. All the nations have floating exchange ratesand they are dependent on inflation, interest rates, current account deficit and import and export. The currency ratesset the tone for import and export in the country.

Foreign exchange of a country is basically the conversion of the currencyof a country with another. Forexhelps in the economic development of a country and the currencyvalue may be set by the government of that country. A number of firms offer services for currencyoverlay that reduces the risks associated with the investment. The currency powercan be determined by valuing it to another country’s currency. You can use a currency converterto determine the value of the currencyas against the currencyof another country. For International trade, currency tradingworks best as compared to sanctions. Currency exchangeshows effective results and has proven to be an ideal way of enabling an economy to grow. Sanctions are short term solutions that are not as effective as currency services. There is a growing awareness offorex optionsthat allow traders to realize gains without having to purchase the currency. Traders across the world have made gains from online forexand benefit from the exchange rates.

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