Could you please refer the below given scenario and answer the questions
1.Could you please critically explain reasons for the Sri Lankan company to invest in the international market over local business
2.Could you please briefly explain "Foreign exchange levels and Foreign direct investment inflows correlate in a long run", prove the statement with reference to the scenario.
Scenario: Foreign Exchange lnternatio nal banks provide the core of the FX market and serve their retail clients, the bank customers, in conducting foreign commerce or making international investment in nancial assets that requires foreign exchange. Almost '70!) banks worldwide stand willing to buy or sell foreign currency for their own account and make a market in foreign exchange. Non- bank dealers are large non-bank financial institutions, such as investment banks, whose size and frequency of trades make it cost effective to establish their own dealing rooms to trade directly in the interbank market for their foreign exchange needs. Most interbank trades are speculative or arbitrage transactions where market participants attempt to correctly judge the future direction of price movements in one currency versus another or attempt to prot from temporary price discrepancies in currencies between competing dealers. FX brokers match dealer orders to buy and sell currencies for a fee, but do not take a position themselves. Interbank traders use a broker primarily to disseminate as quickly as possible a currency quote to many other dealers. Central banks sometimes intervene in the foreign exchange market in an attempt to inuence the price of its currency against that of a major trading partner, or a country that it "xes" or "pegs" its currency against. intervention is the process of using foreign currency reserves to buy one's own currency in order to decrease its supply and thus increase its value in the foreign exchange market, or alternatively, selling one's own currency for foreign currency in order to increase its sup ply and lower its price. The interbank market is a network of correspondent banking relationships, with large commercial banks maintaining demand deposit accounts with one another, called correspondent bank accounts. The correspondent bank account network allows for the efficient functioning ofthe foreign exchange market. As an example of how the network of correspondent bankaccounts facilities international foreign exchange tra nsactions. consider a Sri Lanka importer desiring to purchase merchandise invoiced in Yen from a Japan exporter. The Sri Lankan importer will contact his bank and inquire about the exchange rate. if the Sri Lankan importer accepts the offered exchange rate, the bank will debit the Sri Lankan importer's account for the purchase of the [apanese yen. The bank will instruct its correspondent bank in the [apan to debit its correspondent bank account the appropriate amount of yen and to credit the Iapan exporter' 5 bank account. The importer's bank will then debit its books to offset the debit of Sri Lankan importer's account, reflecting the decrease in its correspondent bank account balance. Consider that you have been recruited as the Financial Advisor for a Sri Lankan company who are now planning to step into foreign investments. The company owner has asked you to provide a report on investigating foreign markets which they can gain more prot by investing. You are required to cover following areas in the report you submit to the company owner
