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Factors Affecting the Exchange Rate | International Finance

The following points highlight the four main factors affecting the exchange rate. The factors are: 1. Differing Rates of Inflation 2. Capital Movements 3. Structural Changes 4. Role of Speculation. Factor # 1. Differing Rates of Inflation: True enough, the exchange rates of countries that inflate fastest will be depreciating, while the exchange rates of […]

How is the Rate of Exchange between Two Currencies Determined?

The following article will guide you to learn about how is the rate of exchange between two currencies determined. Foreign Exchange Rates: Thus exports and imports of goods between nations with different units of currency introduce a new economic factor: the foreign exchange rate, which gives the price of the foreign currency in terms of […]

Floating Exchange Rates: Advantages and Disadvantages | Currencies

In this article we will discuss about the advantages and disadvantages of floating exchange rates. Advantage of Floating Exchange Rates: Floating exchange rates have the following advantages: 1. Automatic Stabilisation: Any disequilibrium in the balance of pay­ments would be automatically corrected by a change in the exchange rate. For example, if a country suffers from […]

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