In the forex market, currencies are treated like company stocks or commodities, and investors gauge the value of the currency based on the National EconomyĬountries with stronger economies, flourishing trade and a stable GDP are likely to have a stronger currency with more value.Ī strong economy is supported by political stability, trade surplus, a stable GDP, employment and many other positive factors. On the other hand, to buy the Rupee, they have to sell another currency, sending the value of this currency down.Ĭurrency trade is the biggest trading market in the world, with trillions of dollars of value being traded every single day. When investors see value in one currency, like the Indian Rupee, they will choose to buy more of it, sending its value up. This trade is done in pairs, where investors sell one currency and immediately buy another. The currency market, also called forex, is a marketplace for investors to buy and sell currencies. The value of a currency is affected by so many wide-ranging factors that it becomes difficult to pinpoint which is the most influential. Dollar with 80 Indian Rupees, meaning that the exchange rate for the Indian Rupee in terms of the U.S. Each currency’s value in turn determines its exchange rate. There are several factors that play a role in determining the value of any currency. Exchange rates are determined by forces of supply and demand, which are in turn influenced by a number of factors.Įxchange rates are very important to trade and business since no country or business is a standalone entity – all countries engage in trade, and this exchange rate plays a very important role in the import and export of goods and services. Where can I find current exchange rates?Īn exchange rate is the rate at which one currency is exchanged for another currency.How can businesses manage exchange rate risk?.How do exchange rates impact international trade?.
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