The exchange rates used to determine the amount of currency that can replace it . For example , the exchange rate tells you how many dollar is a dollar in foreign currency, and vice versa. You definitely need to understand the exchange rate when you travel to another country . For example, if you have traveled to Canada, September 30, 2013 , you can find a Canadian dollar was worth $ 1.03 U.S. dollars . That day , you can put a $ 1 and get $ 1.03 in Canadian currency
The floating rates
Most exchange rates are determined by the foreign exchange market known as forex . For this reason, rates fluctuate moment to moment , depending on what traders believe the currency is worth . It depends on many factors, including the interest rate the central bank , the country’s debt levels and the strength of its economy. Most countries allow their currencies to be determined by the currency market . This is known as a flexible exchange rate .
The United States allows the currency market to determine its value . The dollar strengthened against most currencies during the financial crisis of 2008. As stock markets around the world fell as traders flocked to the relative safety of the dollar. Why was the dollar safe? After all , the crisis began in the United States and worsened until March 2009 . However, the confidence of the majority of investors in the United States to ensure the safety of the global currency in the world . The dollar has actually replaced the gold standard with the Bretton Woods agreement . For example, the Canadian dollar was worth $ 1.39 U.S. dollars . For more information on the role of the dollar value of the U.S. dollar view and power of the U.S. dollar
Fixed exchange rate
A country with a fixed exchange rate of China. Linking its currency , the yuan, at a fixed value against the dollar . At September 30, 2013 , a dollar was worth 6.12 Chinese yuan. The dollar weakened against the yuan since February 7, 2003 , when a dollar could be exchanged for 8.28 yuan
China must manually adjust the exchange rate of the yuan to the dollar. This is because the U.S. government pressured the Chinese government to allow the yuan to appreciate in value. This allows U.S. exports more competitive prices in China. It also makes Chinese exports to the U.S. more expensive. To learn more about how this affects you , see U.S. trade deficit China
Why the euro is special
Most rates are given in terms of how much a dollar is worth in foreign currency. The euro is different. It is usually given in terms of the amount of one euro worth in dollars. This almost never happens in the other direction . So while the dollar was worth € 0.75 September 30, 2013 , you do not hear that one euro was worth $ 1.33.
The euro has weakened considerably from its peak of $ 1.60 April 22, 2008 . This is because the future of the European Union and the euro itself was in question during the Greek debt crisis . Furthermore, the European Central Bank ( ECB) cut its interest rates. This decrease in interest rates of banks for loans to anyone or savings in euros , which reduces the value of the currency itself . At worst, the value of the euro fell to $ 1.22 August 2, 2012 For more information about the history of the exchange rate between the dollar and the euro, see Euro Dollar Conversion (Source: Federal Reserve Bank of Bank Reserve website New York)
However, the euro is special because it is the second most popular currency after the dollar . It is used by 332 million people as their single currency . The popularity of the euro is due to the strength of the European Union, which goes side by side with the United States is the world’s largest economy. Although the euro has not been adopted by all EU countries , no other currency is close to being a global currency. At the end you can check bestchange.com for professional help, click here