"Exchange Rate"
"Exchange Rate" refers to foreign exchange rate in general meaning. Exchange Rate between two currencies, in a simpler sense, can be understood as the rate at which one currency can be exchanged for another. In this state, it is clear that exchange rate is all about the exchange of value of one country's currency with that of another currency. Exchange rate is determined in the foreign exchange market which welcomes to a wide range of various types of buyers and sellers where there is continuous 24 hours a day except weekend's trade of currency. So the trading starts from 20:15 GMT on Sunday until 22:00 GMT Friday. Continue down below..

Exchange Rate


Additionally, spot exchange rate is the current exchange rate and the forwarded exchange rate is an exchange rate which is quoted and traded today but for delivery and payment on a specific future date. So far, there is exchange rate regime which means that each country manages to determine the value of the currency through various mechanisms. Whenever the value of the currencies is determined by the market forces of supply and demand, it is free floating. In such case, the value of the currencies is almost same to that of the value quoted on the financial markets, mainly by the banks around the world. A movable or adjustable peg system is a system of fixed exchanges rate with the provision for the revaluation of the currency.

There may also be the fluctuation in exchange rates according to the market-based exchange rate. Whenever there is a greater demand of the available supply, the value of the currencies will tend to be very valuable. As value of currency becomes less whenever the demand of the currency is less than the available supply. The increased demand for a currency is caused whenever there is an increased transaction demand for money or an increased speculative demand for money. The transaction demand is interrelated to a country's level of business activity, gross domestic product (GDP) and employment levels. If there are more people who are unemployed, there will be less number of goods and services which are used as it will cause the low rate of using currencies. So it depends upon the central banks that are still having difficulty adjusting the available money supply to balance changes in the demand for money due to business transactions. (DCnepal Reporter) Copying and re-publishing this content is strictly prohibited.