2007-01-04 07:17:40 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
It is the relative valuation of two currencies.
For example a US dollar buys about 11 Mexican pesos and the peso is worth about 9 US cents.
The rate is set by either by the Central Bank of a country or by open market forces. China has a fixed rate which has been a bone of contention with the US.
Most countries have variable rates that change daily.
Lots of factors enter the equation such as relative interest rates, the price of oil, political stability etc.
2007-01-04 07:30:59 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The exchange rate is the relative value of one currency vs. another foreign currency. For example, the dollar is worth about one half British Pound.
Exchange rates are determined by the foreign exchange markets where banks and speculators trade one currency against another. The value is driven by the interest rates of each country.
2007-01-04 15:25:17 · answer #2 · answered by Oh Boy! 5 · 0⤊ 0⤋
It comes down to 'trust' in a country. If you had tons of money, you have two choices... put it somewhere where it will grow (and thus have risk of losing) or put it somewhere where it is safe and stable.
The fluctuations in the exchange rate have to do with the health of the government and the economy of each country.
2007-01-04 15:24:58 · answer #3 · answered by words_smith_4u 6 · 0⤊ 0⤋
GDP
2007-01-04 15:20:05 · answer #4 · answered by LuckyChucky 5 · 0⤊ 0⤋