Toyota’s success on the international market is due to its desire to create products with high quality, perfecting and innovating automotive technologies, making new models, showing concern for consumption, but also for the environment surroundings, focusing on the consumer. Toyota has committed to develop hybrid systems as a basic factor of the eco-car technology. The company set up design labs in Europe and USA for a better understanding of local influences and preferences of current and potential clients, showing care for their needs. The company used its financial market to attract funds from investors and channel them to corporations, set prices for trade and to raise capital. Foreign exchange forward contract and foreign currency options is used by Toyota in order to manage its exposure to foreign currency exchange rate fluctuations and interest rate fluctuations.
International Money Market
The international money market is also known as foreign exchange trading, or forex. It is a market where international currency transactions between numerous central banks of countries are carried on. Toyota is affected by fluctuations in foreign currency exchange rates. Its foreign currency exposures are connected to selling, buying and financing in currencies other than the local currencies in which it operates. Toyota’s most important fluctuations in foreign currency exposures relate to the U.S. dollar and the euro. Foreign exchange rate changes have affected Toyota’s revenue, gross margin, net income, retained earnings and operating income and costs.
International bond market
The international bond market actually consists of several domestic and foreign mutual funds, banks, brokerages and institutions that buy and sell bonds from different markets. Toyota has regularly issues yen denominated bonds in offshore markets to meet international demands for funds.
International Capital Market
The company used international capital markets to facilitate buying and selling of financial instruments, stocks and bonds to raise capital. Capital markets have reflected Toyota Motor Corporation to finance its overall operation and growth.
International Credit Market
The international credit market is used by Toyota Motor Corporation to increase capital through issuing debt to its investors. It consists of junk bonds and short term commercial paper. According to (Toyota Annual Report, 2017) it has reported that their long-term debt as at March 31, 2017 is ¥9,911,596 million and short term debt is ¥4,953,682 million.
Toyota Stock Price Fluctuations
Date Open High Low Close Volume
Mar 30, 2017 110.00 110.30 109.89 110.06 202,800
Mar 29, 2017 110.26 110.34 110.11 110.25 390,400
Mar 28, 2017 111.90 112.59 111.79 112.41 205,400
Mar 27, 2017 111.03 111.96 110.76 111.73 211,700
Mar 24, 2017 111.11 111.62 110.92 111.36 161,700
Mar 23, 2017 110.55 111.09 110.32 110.51 159,900
Mar 22, 2017 110.89 111.00 110.12 110.83 279,300
Mar 21, 2017 112.69 112.86 111.12 111.39 383,100 383,100
Mar 20, 2017 112.26 112.60 111.94 112.00 186,600
Mar 17, 2017 112.64 112.74 112.07 112.21 480,500 480,500
Mar 16, 2017 113.71 113.96 113.17 113.24 109,400
Mar 15, 2017 112.63 113.50 112.54 113.24 170,500
Mar 14, 2017 112.48 112.60 112.01 112.09 130,600
Mar 13, 2017 113.37 113.82 113.33 113.40 233,500
Mar 10, 2017 112.84 112.98 112.40 112.66 286,900
Mar 09, 2017 112.11 112.41 111.88 112.19 150,500
Mar 08, 2017 112.55 112.59 111.76 111.80 178,400
Mar 07, 2017 112.69 113.05 112.50 112.65 171,600
Mar 06, 2017 113.14 113.14 112.75 112.91 162,000
Mar 03, 2017 113.27 113.54 113.07 113.34 123,800
Mar 02, 2017 113.59 113.89 113.16 113.39 252,700
Mar 01, 2017 114.82 114.98 114.51 114.74 240,400
Table Showing Toyota Stock Prices in March 2017
Toyota changes its stock prices on a regular basis based on the table above. The table has shown the open, high, low, close and volume of stock prices in the year 2017. The stock prices move up and down due to fluctuations in supply and demand. The increase in supply in relation to the demand leads to a decline in the stock price. However, an increase in the demand in relation to the supply causes stock price to increase. The company issues the stocks in USD currency. An increase in the stock prices as well as the demand for USD indicates a positive correlation between the stock price and rate of exchange.
Chapter 10: Hedging Techniques Used
Derivative instruments such as foreign currency forward contracts, foreign currency option contracts, foreign currency swaps and interest rate swaps are used as hedging instruments to
manage its exposure to fluctuations in interest rates and foreign currency exchange rates.
