Volatility in International Business Environment

The Korean peninsula crisis took serious turn when North Korea flew missile over Japan to demonstrate its capabilities to strike back USA which is fuming over the North Korea consistently over last month’s directly threatening for military action. The global business directly linked with USA increasingly feeling jittery aptly demonstrated in the performance of stock exchanges.

As if the flying of missiles over Japan was not enough, North Korea exploded a powerful Hydrogen bomb just few days back, changing the security scenario in pacific to a completely new and dangerous turn. Immediately after that South Korea asked the USA to deploy the THAAD missile defense system on its territory ignoring the objections raised by China.

Sensing the increasing prospects of military confrontation, the markets reacted sharply. While the USA pitched for greater and more rigorous economic sanctions, China and Russia opposed the move stating that the approach of the reliance on sanctions have failed to achieve its objectives and only way forward is to engage North korea as opposed to completely isolating NK and given the potential involvement of weapon of mass destruction in any military operation, war is not an option on the table.

Given the increasingly hostile situation in the pacific, the dollar faced the burnt and started sliding and in the search for safer avenues to park their investment, investors have flocked towards gold and now gold have crossed Rs. 31000/10 gram first time in last ten months.

This discussion was part of a wide ranging discussion on the effect of dramatically changing scenario in international business and its impact on various asset classes was held in Mangalmay Institute of Engineering and Technology.

 

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