Currency Exchange Rates

Currency Exchange Rates

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Currency Exchange Rates

 

Exchange Rates
To understand how one currency compares in price with another, use the exchange rate – the cost of one currency in units of another. There are three types of courses:

What is the exchange rate and conversion
Direct – with its help determine the value of the national currency per unit of foreign.
Inverse – shows the cost of foreign currency per unit of national.
Cross rate – correlates two currencies with the US dollar exchange rate. This is necessary if one currency cannot be directly exchanged for another. For example, to exchange euros for Canadian dollars, you need to compare both currencies with the dollar, and then with each other.
The exchange rate changes in real time. The course chart allows you to track and predict the dynamics of the value of national money.

Exchange rate in real time
The exchange rate shows how the money of different countries correlates with each other, and also reflects the state of the economy of states.

What affects the value of a currency
The value of a currency is determined by supply and demand. Currency is constantly bought and sold for other currencies. With a lack of money, demand increases and the price of the currency increases. If a country is oversaturated with money, supply exceeds demand and the price of the currency falls. If this process is not stopped, money may depreciate – this will lead to inflation.

To prevent this from happening, the Central Bank, a financial institution that controls the entire financial system of the country, monitors the exchange rate. The Central Bank sets the official rate, but exchanges and banks have their own rates. The Central Bank can only maintain them at an acceptable level: raise or lower the key rate, issue additional money.

Sometimes the central bank loses control over the value of a currency and it becomes unpredictable. This happens due to unforeseen circumstances: political crises, man-made disasters, military conflicts.