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Local-currency-based

Describing financial transactions, investments, or economic activities that are conducted, valued, or denominated using the currency of the specific country or region in which they occur. This approach contrasts with using a foreign currency, such as the US dollar or Euro, and is often employed to reduce exposure to exchange rate fluctuations, promote economic self-reliance, and support domestic economic development. It also enables more accurate pricing reflecting real purchasing power within a specific market, and reduces the need to convert between currencies.

Local-currency-based meaning with examples

  • The construction company secured a loan that was local-currency-based, meaning repayments and the principal were in the domestic currency. This shielded them from potential losses if the exchange rate shifted unfavorably. Using local currency allowed them to manage their cash flow with greater predictability and also supported the stability of their operations in the local economy.
  • The small business decided to implement local-currency-based pricing for its exports. This streamlined the transaction process and improved the buyer's experience. Additionally, it eliminated the need for currency conversion, enhancing the ease of transactions for both buyer and seller and creating a stable and attractive market for exports.
  • The government encourages foreign investment through a strategy of local-currency-based incentives. The investment returns are held locally, providing the government with a method of growing their domestic market with an additional source of growth and preventing outside foreign currency drain.
  • The economist's analysis of trade balance focused on local-currency-based calculations to show the true strength of the regional economies in relation to each other. Using the domestic currency for valuation provided a more realistic picture, eliminating currency risk, of the actual economic exchanges and purchasing power within the country.

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