Features of Exchange Rate

Features of exchange rate includes all the features of currency of any country  which is to be traded in foreign exchange market. If you are beginner in forex market, you should know first the meaning of exchange rate and then you should know its features.

What is exchange rate?

Exchange rate is a rate at which one currency will be exchanged into other currency. For example today rate of One USA dollar can be compared with Indian Rupees.

Exchange rate will be always conversion rate of stronger currency to your currency. For getting 1 US $, you will have to pay Rs. 44.89. So, this is exchange rate.

Features of Exchange Rate 

1. Exchange Rate always fluctuates Due to Stronger or Weaker of  Currency :

It is the main feature of exchange rate that it always fluctuates. If our currency will strong at that time, our exchange rate will differ from previous exchange rate. Suppose, today, one dollar's exchange rate is 44.89. If tomorrow, our currency strong, we have to pay less for buying one dollar. It may be Rs. 43 or Rs. 42 for one dollar. This shows also the appreciation of our currency. Weaker of our own currency means depreciate our currency. At that time, we have to give more money for buying one dollar. It may be Rs. 46 or Rs. 47.

2. Exchange rate always are affected from balance of payment and trade, interest rate (inflation rate), economic growth and fiscal and monetary policies and political issues:

Exchange rate of any currency are affected from balance of payment and trade. More negative balance of trade will depreciate our currency. In future, if our balance of payment will be surplus, at that time, we can compare Rs. 1 with number of dollars in exchange rate. There are also lots of other factors which affect any currency exchange rate like interest rate or inflation rate, economic growth, fiscal and monetary policies and political issues

3.  Exchange rate are two types, one is buying exchange rate and other is selling exchange rate:

If we talk about the feature of exchange rate mechanism, we should know that exchange rates are of two types. One is buying exchange rate and other is selling exchange rate. Both rate may or may not be equal. 

4. Bid Vs Offer  

 Prof. Tim Bennett  has explained about bid and offer feature of exchange rate in his video lecture "Beginner's guide to investing: the currency market" that bid and offer always will be different. He explained this with an example, "Suppose we compare BP with USD and its bid may be 1.61863 USA dollar for every  one British pound  and its offer may be 1.61867 USA dollar for every one British pound. One more interesting thing, he explained in his video that bank's  buy rate always will be your sell rate in bid and bank's sell rate will be your buy rate in offer.

Related : Hedging in Foreign Exchange Market






access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Finance Journal Entries Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: Features of Exchange Rate
Features of Exchange Rate
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock