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hange rates. Currency conversion is critical for expanding international trade among countries as one country may not take a dollar for something that another country is selling in Euros. Thus, the existence of an international monetary system is important to expand international trade among countries as the impact affects the sales, profits, and strategies of corporations all over the world. The function of the foreign exchange market is to convert the currency of one country into the currency of another and to provide Insurance against foreign exchange risk. Insurance against foreign exchange risk protects a company from the possibility that unpredicted changes in future exchange rates will have adverse consequences for the firm. Consequently, a fixed exchange rate not only slows competitive deflation and brings stability to the world trade environment, but also inflicts a monetary restraint on countries to limit price inflation. Thus, fixed exchange rates are viewed as a way to control inflation on countries. Through lending operations, IMF funds buy time for countries to bring down their inflation rates and reduce their balance-of-payments deficits reducing pressures for devaluation allowing for a more orderly and less painful adjustment.

While the inflation rate (as measured by the change in year over year CPI) for the US was 0.4 in the beginning of 2004, the next several years fluctuated between -0.1 and 0.6. The expected inflation rate for Aug 2010 is 1.7. Although this number is dramatically higher than that from 2004, it is a gradual decrease from 2.6 (Jan 2010).So, while the level of prices of US goods and services has been increasing throughout the last several years, a small decline can be expected over the next several months.

Furthermore, it is important for wire and cable companies to understand the impact differing GDP’s have on the industry. An increase in GDP indicates economic growth within a country and means that a country is constantly increasing their standard of living. For example, the US experienced a steady increase in US GDP from 2004 (11430.9 billion) through 2008 (with a steady decline from Sep 2008-May 2009). GDP then began to increase once again to 14532.5 in Jan 2010 and is expected to steadily increase to 14,911 by Sep 2010. Thus, it is reasonable to assume that the general trend of the US is to always strive for an increased standard of living.

While increased standards in living signify increased consumer spending, the “weak vs. strong” dollar determines where consumers spend their money; resulting in a shift on the affect of imports and exports. In the US, consumer spending increased by 1.7 percent in 2008 following an increase of 2.6 percent in 2007. Nonetheless, the US has seen the balance of trade continuing to decline due to high levels of exports. While the US only exported 1135.1(billion) towards the beginning of 2004, exports of goods and services have steadily increased over time and are expected to reach 1860(billion) by Sep 2010. This indicates that the US is becoming wealthier as it is steadily receiving more and more money from other countries. Additionally, an increase in exports typically means that unemployment rates will drop as well. On the other hand, US imports of goods and services in the beginning of 2004 were 1678.5 and have also seen a steady increase throughout the years and are expected to increase to 2395 (billion) by Sep 2010. Howev