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What is the currency rate?

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  • What is the currency rate?

    What is the currency rate:

    Also named as Exchange Rates

    Currency rate is a term which is simply the price value of the current currency you have compared to the price value of the other currency

    For example, when we say that the price of one US dollar is $ 1.11270 Euro, when you buy a Euro currency, here, you sell the dollar you have and Vice versa.

    Thus, in order to obtain currency, another currency must be paid for it.

    Why do people buy currencies from other countries?

    When a dealer from Malaysia, for example, buys goods from Europe, he must pay the goods in a currency acceptable to the European seller. Often, the European seller will not accept the monetary value of a Malaysian Ringgit but wants to get his commodity values in a currency acceptable in most countries of the world such as the US dollar, the euro, the pound sterling or even the Swiss franc.



    Here, the Malaysian trader has to replace the Malaysian Ringgit that he owns to buy Euros to send to the European seller for the goods he wants to buy from him by monitoring live currency rate to know the exact current value of desired currency he wants to buy!

    Similarly, if a Malaysian tourist wants to travel to a European country for the purpose of tourism, he must buy in his local currency the European currency (euro) to be able to pay goods and services purchased in European territory.

    These are the main reasons why a person buys another country's currency.

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    Of course, in order to buy something you should know its price.. Similarly, when you want to buy a currency, you must know the monetary value in some other currencies which called currency rate.

    What is High and low exchange rates (currency rate)?

    And What is Supply and demand theory?

    You know that when demand for a commodity increases, its price rises, and when demand drops, its price drops.

    When the number of people who want to buy a product exceeds the number of those who want to sell, the product will cost more.

    This is called low supply and demand theory.

    This law applies to currency rate as applied to anything else.

    If the number wanting to buy a currency is greater than the number of sellers, the price of this currency will rise.



    If the number of those wishing to sell a currency is more than the number of buyers, the monetary value of this currency will decrease.

    For example, if you go to a bank and asked about its cost of replacing the dollar almost against the euro and the result was that the dollar = 1.11270 euros

    Here you have to pay 1.11270 euros for $ 1.

    But if many people want to buy the euro, the cost will rise to 1.11300, for example, the greater of people who want to pay the dollar against the euro, the value of the euro against its dollar will increase gradually.

    Watch Video

    Major currencies in the currency rate

    Every bit, you know, each country possesses its own currency and the international market gives each currency a special symbol known to ease the interaction between traders without mistakes,

    For lesson, may be similar to several countries dealing with the dollar, is the name of the currency of the United States of America and the currency of Australia and the currency of Canada and many nations.

    Thus to avoid mistakes in trading, it is internationally agreed that the currency of each nation will be thrown its own symbol known worldwide.

    For instance, the US dollar symbol is USD

    The Canadian Dollar Symbol is CAD for Canadian Dollar

    The Australian Dollar symbol is AUD for Australian dollar

    Thus, for each currency a country follows its own symbol.

    In principle you can deal and buy the currency of any nation in the world. But trading in the currency market is mainly focused on four currencies:

    Euro: The European currency and EUR symbol.

    JPY: The Japanese currency and the JPY symbol for the Japanese yen.

    GBP: British Pound (GBP) for Great Britain pound.

    CHF: Swiss currency and CHF symbol for Franc.

    In the currency market, 80% of the trading takes place in the previous four currencies.

    But for what?
    When you want to buy the yen what you will pay for it

    Dealing with previous currencies is all against the US buck.

    Remember, currency trading takes place in the form of pairs when you buy a currency, you must sell against it another currency and vice Versa as mentioned before
    Continue Reading>>

  • #2
    Thank you for the detailed explanation.

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