Exchange rates are used to compare international prices of goods and services. They are also used to compare the return on foreign currency-denominated stocks and bonds to the return on domestic assets. In the 1970s, the stress was on the monetary approach to balance of payments. The focus of attention in this approach was on international trade flows as primary [...]
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 domestic currency. The two important [...]
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 countries that inflate slowest will [...]