Foreign Exchange in Thanjavur - FEX Forex Pvt. Ltd
Foreign exchange, or forex, is the exchange of one country's currency into another. Know what is Forex trading, functions of foreign exchange market & many more at Karvy Online. The objective of FX trader is to make profits from these fluctuations in prices, speculating on which way the foreign exchange rates are likely to move in the future.
Currency trading markets are available 24-hrs a day, five days a week, Saturday and Sunday being holidays. Forex transactions are generally quoted in pairs because when one currency is bought, the other is sold. The first currency is called the ‘base currency’ and the second currency called the ‘quote currency’. Foreign exchange, or Forex, is the value or price of one country's currency in comparison with another. A forex rate is a rate at which you buy foreign currency and is subject to change continuously. This rate is always interpreted in currency pairs, for example, if the price of USD/INR is 74.54, then it takes INR 74.54 to buy 1 USD. more details
Currency prices are determined by a host of economic and political conditions, most importantly, interest rates, international trade, inflation, and political stability. Occasionally, the government participates in the foreign exchange market to influence the value of the country’s currency by either flooding the market with their domestic currency to lower the price or buy in order to raise the price. This is known as central bank intervention. When the currency of our country appreciates corresponding to the prices of another country, the prices of goods of our country go up abroad and foreign goods’ prices in our country come down.
The market determines the value, also known as an exchange rate,
of the majority of currencies. Foreign exchange can be as simple as
changing one currency for another at a local bank. It can also involve
trading currency on the foreign exchange market. For example, a trader
is betting a central bank will ease or tighten monetary policy and that one currency will strengthen versus the other.view details
When trading currencies, they are listed in pairs, such as USD/CAD, EUR/USD, or USD/JPY. These represent the U.S. dollar (USD) versus the Canadian dollar (CAD), the Euro (EUR) versus the USD and the USD versus the Japanese Yen (JPY). There will also be a price associated with each pair, such as 1.2569. If this price was associated with the USD/CAD pair it means that it costs 1.2569 CAD to buy one USD. If the price increases to 1.3336, then it now costs 1.3336 CAD to buy one USD. The USD has increased in value (CAD decrease) because it now costs more CAD to buy one USD.
Many factors can potentially influence the market forces behind foreign exchange rates. The factors include various economic, political, and even psychological conditions. The economic factors include a government’s economic policies, trade balances, inflation, and economic growth outlook.
Political conditions also exert a significant impact on the forex rate, as events such as political instability and political conflicts may negatively affect the strength of a currency. The psychology of forex market participants can also influence exchange rates.
The foreign exchange market moves based on how currency valuations change in relation to other currencies through exchange rates. There are two types of exchange rate: floating and fixed.
A floating exchange rate is free of government restrictions. It is a country’s exchange rate system that “floats” on the global foreign exchange market against other currencies. Floating currencies includeU.S. dollar, euro, sterling, the Australian dollar, the Canadian dollar and the Japanese yen. A fixed exchange rate involves government restrictions on the currency in order to protect its value. A fixed exchange rate system is usually used by countries with more vulnerable economies. Prominent examples of countries with a fixed exchange rate system include Brazil, Russia and Argentina. The change in exchange rates is dependent on a large number of factors, including import and export levels, interest rates, inflation, domestic political stability, foreign geopolitical factors and tourism. get details
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