Question

Importance of bop. business managers and investors need bop data to anticipate changes in host-country economic policies that might be driven by bop events. from the perspective of business managers and investors, list three specific signals that a country's bop data can provide.

Answer 1

The three specific signals that a country’s BOP data can provide are:

The BOP is an significant pointer of burden on a country's foreign exchange rate, and therefore on the possible for a firm swapping with or capitalizing in that country to practice foreign exchange gains or losses. Fluctuations in the BOP may forecast the burden or elimination of foreign exchange controls. 


Modifications in a country's BOP may indicate the nuisance or removal of controls over imbursement of dividends and interest, royalty fees, license fees, or other cash payments to foreign companies or stockholders.

The BOP assists to predict a nation's market prospective, particularly in the short run. A country undergoing a grave trade shortfall is not expected to enlarge imports as it would if successively a surplus. It may, though, welcome investments that grow its exports.