International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. Important theories in international finance include the Mendel-Fleming model, the optimum currency area (OCA) theory, as well as the purchasing power parity (PPP) theory. It also studies international projects, international investments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps. International finance is a branch of international economics.
