The Value Of A Country 's Currency

Simply speaking, if the rate is high, firms will find their returns on investments increase domestically. That, in turn, creates a higher demand for the U.S. currency. Effectively, the exchange rate also increases. It pushes the dollar value higher compared to other currencies. So even if there has been nothing changed in the input of a firm, the output now all of a sudden becomes more expensive in the countries where it exports its products to due to the new exchange rate. Export is reduced for that reason. As of for import, other countries would be very happy to see the change in exchange rate. Their products now are cheaper making import value goes up. As we now, the net exports equals export minus import. Export goes down and imports go up means net export goes

One needs to have a base level understanding of what defines an exchange rate. According to Investopedia, a foreign exchange rate is “The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.”(Investopedia, 2012) The process by which foreign exchange rates are determined is really not any different than any other

The most obvious national influence on the Canadian dollar is the well being of the Canadian economy. A strong economy makes the country interesting for investors because it provides a strong economic return. This increases the demand for Canadian dollars and raises the exchange rate. Furthermore, a relatively small supply of investment returns decreases the demand for Canadian dollars economy. It is important to note however that economic strength is a relative concept. A prolonged period of economic growth in Canada will result in not increasing the exchange rate relative to the US dollar. This depends on the country experiencing growth, equal or higher

Exchange rates play a pivotal role in the relationships between individual economies and the global economy. Almost all financial flows are processed through the exchange rate, as a result the movements and fluctuations of the exchange have a significant impact on international competitiveness, trade flows, investment decisions and many other factors within the economy. Due to the increasing globalisation of the world economy, trade and financial flows are becoming more accessible

An exchange rate is the price for which one currency is worth converted into another rate. The exchange rate is determined by the supply and demand conditions of relevant currencies in the market transaction of currency exchanges occur in the foreign exchange markets. For example, currently, the £1 is worth $1.67 which means that at this stage, the pound is stronger than the dollar. Businesses should ensure that they frequently check the exchange rates to see if any changes to their prices need to be made or if the exchange rate benefits them. If Iron Bru were to export a large amount of products to a country such as Germany or Poland, there will

The exchange rate is the currency of a country expressed in terms of another currency, for example, US dollar or other nation’s currency compared to Canadian dollar. Canada has a flexible system when it comes to exchange rate system. Canada targets inflation to maintain the domestic value of the Canadian dollar. The exchange rate for the Canadian dollar against US dollar and other currency can be affected by supply and demand for Canadian dollar in foreign exchange market. Canada competes with many other countries for the share of US market, which is one of their top traders. However, many factors can affect the currency of the Canadian dollar with dominant role of different point in time. These factors include; the world prices for commodities.

An exchange rate is the value of a currency compared another currency to find a ratio and a rate of exchange if one were to take place. According to X-Rates these some exchange rates with the United States dollar; 1 USD to .90 Euro, 1 USD to .70 British pound, 1 USD to 1.33 Canadian dollar, 1 USD to 113.77 Japanese Yen, and 1 USD to 6.5 Chinese

There are many reasons why the dollar would fluctuate. The strength and weakness of a dollar depends on a number of factors such as inflation and trade deficits. To save the economy from inflation, the Federal Reserve will increase interest rates causing the economy to slow and the value of the dollar to decrease. Trade deficits can also devalue the US dollar. Although the high trade deficit is causing the dollar to fluctuate, the deficit could be a way to make the dollar stronger. Because we are borrowing from other countries, with our interest rates being higher, they would want to buy the US dollar to invest in the interest rate market.

Official interest rate changes will also influence asset prices. For example, bond prices are inversely influenced by long-term interest rates. Finally, the official interest rate will also affect the exchange rate which the paper defines as “the relative price of domestic and foreign money” (George et. al, n.d.). When the official interest rate rises, domestic currency (the GBP) will see appreciation making investors want to invest in pounds. Another key point is that with changes in the exchange rate, there will also be a change in the value of domestic and foreign exports and imports. Finally, a change in the official interest rate can also affect people’s expectations and confidence in the economy. For example, some may believe that an increase in interest rates is a signal that the MPC thinks that the economy is expanding thus making further growth likely or, a contradictory interpretation may be that the MPC thinks that the MPC may need to slow growth in order to control inflation (George, n.d).

The interest rate is the amount charged above the amount loaned, saved or borrowed while exchange rate is the value of a currency compared to another currency.

The foreign exchange rates are influenced by supply and demand of currency. When companies purchase services and products from other countries, they need to convert their money into the currency from the country they bought the product or service from. The value of the money is the exchange rate. When there is a demand

The American dollar rate can reveal the value of dollar compared to other countries. For example,

1) People can lose faith in money because if the value becomes questionable, so will the acceptance of it. Economists believe that the better the fiat money serves as a store of value, the more acceptable it is. This statement basically means that since fiat money is not backed by anything of value, its not as easily accepted. Over time, people gradually come to accept the fiat money because they believe others will accept it also.

The exchange rate of a country measures the external value of the currency. To a country such as Zambia the market for foreign exchange is very important. Its own currency, the kwacha is not a hard currency and thus not universally accepted in payment of debt. Zambia relies on generating foreign currency from selling exports to enable it to finance imports. The macroeconomic situation such as the balance of payments position, employment and inflation are all influenced by a country's exchange rate. Hence it becomes a key economic policy inconsistent.

An interest rate is the amount of profit that is earned over a period of time, the amount of interest acquired is proportional to how much is lent or borrowed. Interest rates give incentives for business and banks to borrow and lend money in order to stimulate the economic activity in any given country. Institutions lend money to borrowers up front in order to receive more money in the future. Some factors to consider when dealing with interest rates are the currency of the amount that is lent and borrowed, the residual term, and the default probability, or the probability that a borrower will not satisfy their debt obligations. Interest rates are extremely important in monetary policy, which is an economic process that has a specific