Listen to a Business English Dialogue About Soft currency
Samantha: Hey Ashley, have you heard about soft currency in business?
Ashley: Yeah, I think it’s when a country’s money isn’t very stable.
Samantha: Right, soft currencies can fluctuate a lot in value compared to stronger ones.
Ashley: So, does that mean businesses need to be careful when dealing with countries using soft currencies?
Samantha: Absolutely, they might face risks like sudden changes in exchange rates affecting their profits.
Ashley: How do businesses protect themselves from these risks?
Samantha: One way is by using financial instruments like forward contracts to lock in exchange rates.
Ashley: Ah, that makes sense. So, they can predict their costs and revenues more accurately.
Samantha: Exactly, it helps them manage their finances better in uncertain currency markets.
Ashley: Are there any other strategies besides using financial instruments?
Samantha: Some businesses also diversify their operations across different countries to spread out the risk.
Ashley: That sounds smart. It’s like not putting all your eggs in one basket.
Samantha: Right, spreading out risk is crucial for long-term financial stability in global markets.
Ashley: Thanks for explaining, Samantha. I feel like I understand soft currency better now.
Samantha: No problem, Ashley. It’s important to be aware of these things in the business world.