of developing countries were moving to flexible exchange rates, which caused concern in the developing countries. The problem was that, until recently, there had been a widespread belief that freely floating rates in developing countries would not work. The argument was that for countries to successfully operate market-determined exchange rates, they would need very sophisticated financial structures, including forward and futures markets, that were often lacking in developing countries. There had also been a concern that floating the currency in the context of serious balance of payments difficulties could lead to a steep fall in its value; this, in turn, could adversely affect price stability and output in the short run (Ajakaiye & Ojowu, 1994, p. 1179).
Decision makers need to understand the various types of floats because of the impact such floats have on international trade and economics. Even companies which do not themselves engage in importing goods or exporting goods are subject to the influence of currency fluctuations. Such companies may have competitors who import goods and sell them in the same market, or competitors who export goods abroad offering greater cash flow to support their domestic activities. Increasingly, however, companies are themselves engaging international trade, particularly since the rise of the Internet has made it possible for companies to market in foreign countries even when the company's own resources are limited.
Decision makers are thus interested in the currency rates of other nations because of the impact such fluctuations can have on the supply of raw materials and the demand for finished goods associated with the company. However, decision makers must also be aware of the currency strategies in foreign markets because of the direct effect such strategies can have on the company's own fortunes. If currencies fluctuate wildly, the revenues received by the company vary in their valu...