Jasz
VIP Contributor
The currency exchange rate/ trade value is the value of one country's currency in terms of another.
The foreign exchange market determines how much of a currency is needed to purchase a unit of a foreign currency. The foreign exchange market determines foreign exchange rates for every currency. It involves all aspects of selling and buying, exchanging of currencies at current or determined prices.
In practice, the rates are generally expressed as a percentage of one currency against another. For example, if we were quoting the U.S. dollar/Canadian dollar (USD/CAD) pair, then an increase in this pair would mean that there was a higher demand for U.S. dollars so that they could be converted into Canadian dollars.
The World Trade Organization (WTO) sets the exchange rates of currencies based on a country's inflation rate and its monetary policy. Generally, if a country has an inflation rate higher than other countries, its currency value will decrease relative to the others, and vice versa. The currency of a country with low inflation will be worth more relative to those with higher inflation.
A country's monetary policy also affects its currency value, as it determines how much money is available and how quickly it enters the economy. This impacts the country's gross domestic product (GDP), which reflects the total value of all finished goods produced within a country's borders in a specific year. The higher the GDP, the more valuable its currency will be.
The foreign exchange market determines how much of a currency is needed to purchase a unit of a foreign currency. The foreign exchange market determines foreign exchange rates for every currency. It involves all aspects of selling and buying, exchanging of currencies at current or determined prices.
In practice, the rates are generally expressed as a percentage of one currency against another. For example, if we were quoting the U.S. dollar/Canadian dollar (USD/CAD) pair, then an increase in this pair would mean that there was a higher demand for U.S. dollars so that they could be converted into Canadian dollars.
The World Trade Organization (WTO) sets the exchange rates of currencies based on a country's inflation rate and its monetary policy. Generally, if a country has an inflation rate higher than other countries, its currency value will decrease relative to the others, and vice versa. The currency of a country with low inflation will be worth more relative to those with higher inflation.
A country's monetary policy also affects its currency value, as it determines how much money is available and how quickly it enters the economy. This impacts the country's gross domestic product (GDP), which reflects the total value of all finished goods produced within a country's borders in a specific year. The higher the GDP, the more valuable its currency will be.
