Comments on: How are currency exchange rates calculated? http://www.currencyexchangemarket.com/blog/how-are-currency-exchange-rates-calculated/ Thu, 17 May 2012 19:40:55 +0000 http://wordpress.org/?v=2.7 hourly 1 By: meg http://www.currencyexchangemarket.com/blog/how-are-currency-exchange-rates-calculated/comment-page-1/#comment-1525 meg Mon, 29 Jun 2009 18:09:19 +0000 http://www.currencyexchangemarket.com/blog/how-are-currency-exchange-rates-calculated/#comment-1525 Exchange rates are not calculated the are determined by the currency exchange markets where traders by and sell currencies. see FOREX. The theory predicts that that the demand for dollars is dependent on the interest investors can get on dollar denominated bonds, so a lower interest rate decreases the demand and would lower the "price" of the dollar, but the amount of the decrease is a rough estimate. Exchange rates are not calculated the are determined by the currency exchange markets where traders by and sell currencies. see FOREX.
The theory predicts that that the demand for dollars is dependent on the interest investors can get on dollar denominated bonds, so a lower interest rate decreases the demand and would lower the “price” of the dollar, but the amount of the decrease is a rough estimate.

]]> By: toodd http://www.currencyexchangemarket.com/blog/how-are-currency-exchange-rates-calculated/comment-page-1/#comment-1524 toodd Sun, 28 Jun 2009 16:20:26 +0000 http://www.currencyexchangemarket.com/blog/how-are-currency-exchange-rates-calculated/#comment-1524 Yuan maybe unchange to dollar and other currencies if Chinese central bank keeps on selling more bonds to commercial banks to buy US bonds, but dollar maybe downgraded to other currencies alone in certain condition. In short term, can use this common equation to determine 90 days exchange rate over dollar adjust with interest rate affect: Ff= (1+rf)Sf/(1+r$), Sf=spot rate Yuan maybe unchange to dollar and other currencies if Chinese central bank keeps on selling more bonds to commercial banks to buy US bonds, but dollar maybe downgraded to other currencies alone in certain condition.

In short term, can use this common equation to determine 90 days exchange rate over dollar adjust with interest rate affect: Ff= (1+rf)Sf/(1+r$), Sf=spot rate

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