Has international finance become an important part of the financial management of firms Has international finance become an important part of the financial management of firms?Why?

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Yes, international finance has become an important part of the financial management of firms, especially with increased globalization. Enterprises are operating in other countries and opening satellite offices in these countries. They invest in foreign markets, source raw materials from foreign markets, and recruit employees from other countries as well. Therefore, it is necessary for firms to understand the financial and investment apparatus of the nations in which they conduct business and investment activities.

In addition, firms engage in foreign exchange transactions, including hedging as mentioned in the above post. They also engage in futures contracts with suppliers from other nations. international finance is increasingly becoming a regular aspect of day-to-day business practice for any firm that conducts any business outside their national borders.

International Finance

 

Hedging with Futures

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It has become important for a variety of reasons not the least of which is foreign investment being incorporated into the firm's investment portfolio. There are now many ways to invest internationally that didn't exist thirty years ago. Businesses have many more options for hedging or, conversely, increasing the growth potential (and risk potential) of their portfolios.

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Almost no major financial institutions are not involved in some capacity in international finance and investment. In particular, many banks hold a great deal of sovereign debt from nations around the world. According to the London newspaper the Independent, almost a quarter of Greek debt is held directly by commercial banks, some of which are in Greece itself, but others throughout Europe and the world. In addition, more than half is held by asset managers, which can include many different types of investors. So international finance is here to stay, though the risks in today's climate can be extreme. 

http://blogs.independent.co.uk/2011/10/17/who-is-holding-greek-debt/

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The answer is yes. The world in which we live is very much an international one. Think of what is happening in Greece and Spain and how it is affecting the markets in the United States. The reality is finance and banks are all inter-related in many ways. Also think about the changes in currencies and how all of this affect profits. In light of all these facts, finance firms are very aware of international issues.

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