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How Do Currency Exchange Rates Work?

Perhaps you visited Mexico or Canada and traded your US dollars for pesos or Canadian dollars. Maybe you flew from England to Japan and traded your pound sterling for yen. If thatu2019s the case, youu2019ve seen exchange rates in reality.

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How Do Currency Exchange Rates Work?

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  1. www.inrxrate.com

  2. How Do Currency Exchange Rates Work? • Perhaps you visited Mexico or Canada and traded your US dollars for pesos or Canadian dollars. Maybe you flew from England to Japan and traded your pound sterling for yen. If that’s the case, you’ve seen exchange rates in reality. But do you know how they work? • “The dollar dropped against the rupee today,” you’ve probably heard the financial reporter on the evening news say. But do you have any idea what that means?  How does Foreign Exchange work? • The Forex (FX) market is the world’s largest marketplace for forex trading.  It is decentralized – in other words, it does not operate in one particular place as stock exchanges do. • The Forex market is accessed by someone who buys or sells a specific currency. So, if you’re sending your income or pension from the UK to Switzerland, you’ll be exchanging your pounds for Swiss francs on the Forex market.

  3. When does it operate? • The Forex market operates 24 hours a day and five days a week. It is open 24 hours because it is always a day somewhere in the world. The forex market is closed only on weekends. But it is still possible to exchange currencies on the weekend. The cost of money • National currencies are critical to the functioning of modern economies. They allow us to convey the value of an item consistently across national boundaries, oceans, and cultures. Since one country’s currency isn’t always accepted in another, we need exchange rates. You can’t buy a loaf of bread with Swiss francs in India. You’d have to first go to a bank and exchange your Swiss francs for INR. The cost of one currency in another currency is referred to as an exchange rate. • You can express that exchange rate as: • 1CHF = 78 INR

  4. Methods of Exchange • The Floating Exchange Rate • The pegged exchange rate • Hybrids Read More:

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