Who calculates the currency exchange rates?
Allrighty asked:
Where do the currency exchange numbers come from? It’s not some guy setting it to certain price every day? It fluctuates in a matter of seconds? So what exactly calculates the number every second? Is it some kind of 1 supercomputer? Or how does it work?
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Where do the currency exchange numbers come from? It’s not some guy setting it to certain price every day? It fluctuates in a matter of seconds? So what exactly calculates the number every second? Is it some kind of 1 supercomputer? Or how does it work?
December 1st, 2009 at 8:58 am
I think there is some government institution in the USA that sets at least our exchange rates.
I’m pretty sure it’s set by government and not banks. kurtiz_j
December 3rd, 2009 at 7:19 pm
There are two main systems used to determine a currency’s exchange rate: floating currency and pegged currency.
The market determines a floating exchange rate. In other words, a currency is worth whatever buyers are willing to pay for it. This is determined by supply and demand, which is in turn driven by foreign investment, import/export ratios, inflation, and a host of other economic factors.
Generally, countries with mature, stable economic markets will use a floating system. Virtually every major nation uses this system, including the U.S., Canada and Great Britain. Floating exchange rates are considered more efficient, because the market will automatically correct the rate to reflect inflation and other economic forces.
The floating system isn’t perfect, though. If a country’s economy suffers from instability, a floating system will discourage investment. Investors could fall victim to wild swings in the exchange rates, as well as disastrous inflation. 【iταϨ†εℓiķεςαηժկ】
December 4th, 2009 at 12:57 pm
I’m pretty sure its all in comparison with how much currency is circulating in the country, like England took themselves out of the recession lately by simply printing more money but that drove the pound right down in value, it was £1.7 for €1 and is now £0.9 for €1. who calculates it not sure but with stock exchange and every thing else its a complicated job i can only imagine. pocpaul