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Showing posts with the label foreign exchange rates

Foreign exchange rates and factors that cause them to change

Foreign exchange rates are a good indicator of the health of a country's economy. Its exchange rate has a significant impact on the volume of trade it conducts. As a result, government agencies are constantly monitoring, analyzing, and, yes, manipulating rates. These rates can have a negative impact on individual investors' portfolios. The main cause of currency rate fluctuations is international trade. A rising currency rate means higher export prices and lower import prices on the international market. When a country has a low currency rate, the opposite is true. A country's trade balance will improve if its currency exchange rate is low, but it will worsen if its currency exchange rate is high. Deficiency in Current Accounts Current account' refers to the difference in trade between a country and its trading partners. Interest, dividends, goods, and services are all examples of payments made from one country to another. A country's current account deficit indicat