Comments on: Who calculates the currency exchange rates?

By: pocpaul

pocpaul — Fri, 04 Dec 2009 17:57:47 +0000

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

By: 【iταϨ†εℓiķεςαηժկ】

【iταϨ†εℓiķεςαηժկ】 — Fri, 04 Dec 2009 00:19:29 +0000

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】

By: kurtiz_j

kurtiz_j — Tue, 01 Dec 2009 13:58:48 +0000

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