2. Short-term investment decisions
Corporations sometimes have a substantial amount of excess cash available for a short time period. Large deposits can be established in several currencies.
The ideal currency for deposits will:
Have high interest rate
Strengthen in value over the investment period
Consider a Thai company that has excess cash. It is considering to deposit the excess cash in a bank account denominated in pounds. If the pound appreciates against the baht by the end of the deposit period, more baht will be received.
The preference of corporations to make short-term investments in foreign currencies has resulted in the creation of the international money market. Large international banks are willing to accept deposits in various currencies.