contacts about Trade Now
home forex brokers news articles rates & charts
Article » Currency Exchange Rate
Currency Exchange Rate
Apr 21 2007, 11:40
Currency Exchange Rate

When it comes to finance you will learn that the currency exchange rate is used to refer to what one currency is worth based upon another currency. You will especially need to know about the currency exchange rate when you are trading in the forex market, mainly because of the fact that the forex market is known as one of the largest financial markets in the world and that over two trillion dollars changes hands each and every day on the average. You must also know that the spot exchange rate is often used to refer to the current currency exchange rate. On the other hand the forward exchange rate is known to relate to the currency exchange rate that is quoted and also traded today but he payment and also the delivery want be made until a future date.

Currency Exchange Rate and the Exchange Rate Regime

When you hear someone talking about the currency exchange rate regime, they are talking about the actual way that a particular country manages or handles the currency when it comes to the respect to other foreign countries and also the forex market. There are a couple of basic types of the currency exchange rate regime; one is that there is a floating currency exchange rate which indicates that the market actually dictates the actual movements of the currency exchange rate. Then you have a pegged float which is when the central bank actually keeps the currency exchange rate from actually deviating farther away from the target band or value. You will also have the pegged currency exchange rate which actually is what ties one particular currency to another type of currency. When it all boils down to the floating exchange rates they are the most common rates that you will find in the exchange rate regime in this day and age. The currencies that are known to float are the Yen as well as the Dollar and also the Euro, but you must remember that based on the fact that central banks are the ones that are more frequent to intervene so that they are able to avoid excessive appreciation or depreciation, these regimes are sometimes referred to as managed float.

Currency Exchange Rate and Pegged Float

When you are referring to a pegged float, it is here that the currency is actually pegged to a particular band or value whether it is fixed or adjusted periodically. When it comes to crawling bands you should know that the actual rates are allowed to actually fluctuate in a certain band that is around what is known as the central value which in turn is adjusted on a periodically basis. This is actually done on what is known as the preannounced rate and is also controlled in a certain way that is following economic indicators. Crawling pegs are where the rates are fixed and also adjusted based on the information that I have listed above. Now when it comes to pegged floats that have horizontal bands, you should know that the currency are actually allowed to fluctuate in what is known as a fixed band which is bigger than one percent and is put around a central rate. On terms of a fixed rate, you will see that these rates have a direct convertibility that is pointed towards another type of currency. The information that I have given you in this article will come in handy when you are trading in the forex market or any other market that deals with trading of pairs of currencies. However, you should also keep in mind that you are going to need more information that the information about the currency rates in order to make sure that you are able to succeed in the market itself. You can get the information that you need on the internet or in books and you will find the information that you find to be very helpful and informative as well. If you think that the information that I have given you here about the rates is not enough, then you can also go online and find information regarding the rates and the certain ways that they are fixed and arranged. You are going to find this information not only important when it comes to the forex market but also if you are planning to take any trips to another country any time soon and that you will need this information in order to know how much your countries money is worth.
| More

of the Month

UFXBank provide up-to-date charts and news feeds, coupled with an easily navigated trading platform. UFXBank traders can access the biggest market in the world 24 hours a day with ease. By keeping their platform, site and deposit process simple, safe and secure, UFXBank have become the web’s premier online forex trader.


Comments & Responses
Word Above:

Related Article
May 13 2007, 08:40 - 0 Comments
Apr 08 2007, 12:33 - 0 Comments
Jul 23 2007, 07:37 - 0 Comments
Aug 30 2007, 06:28 - 0 Comments
May 01 2007, 05:00 - 0 Comments

Currency converter

with Matthew Sheppard
Senior Forex
Advisor at XForex

1. What is your name and position?
Hello, my name is Matthew Sheppard and I am a senior forex advisor at XForex.

2. What is your experience and professional background?
In the last 6 years I had filled several positions in financial institutions such as a stock broker, a foreign exchange desk manager, a financial consultant and in my recent role I serve as a senior Forex advisor for XForex which is an online forex company.

3. What type of clients you deal with?
We deal with clients on all levels from the beginning stages to the more advanced trading levels.

4. Does most of your business activity come from the online or offline world?
Because of our high presence on the web, most of our business comes from the online world.

5. Why should a trader pick XForex from all forex brokers?
Aside from all the benefits that XForex offer like commission-free trading, 24/7 online support, high leverage (200:1), XForex offers educational and learning trading experience that you won’t find anywhere else..
Our team of experts and financial trainers provide personal assistance and guide clients to financial success. We provide daily analysis and market reviews to our clients giving them a better understanding of the market and helping them trade profitably.

6. From your experience, what advice would you give a person who wants to enter the forex world?
My advice to the beginning trader entering the Forex world is as follows:
• Learn the market and understand what you’re getting into.
• Research and find the broker that suits your needs and wants. Look for a good offering but more importantly customer service, don’t go for the low rates offer without being certain they have a good customer service department. From my extensive experience in the Forex world your key to success will be your client-broker relationship. I can honestly say that at XForex they put an emphasis on servicing clients, which is so important.
• Invest smartly and calculate your risks
• Always know when to get out of a trade

read more forex interviews

Home  |   RSS Feed  |   Terms of Use  |   Privacy Policy  |   Advertise