8 Key Factors that Affect Foreign Exchange Rates. 1. Inflation Rates. Changes in market inflation cause changes in currency exchange rates. A country with a lower inflation rate than another's 2. Interest Rates. 3. Country’s Current Account / Balance of Payments. 4. Government Debt. 5. Terms of Numerous factors determine exchange rates. Many of these factors are related to the trading relationship between the two countries. Remember, exchange rates are relative, and are expressed as a FACTORS AFFECTING THE FLUCTUATION IN EXCHANGE RATE OF THE BANGLADESH: A CO-INTEGRATION APPROACH (Rogoff, 2009). Factors affecting exchange rate can be economic, political, psychological and also the short run or long run. Behavior of exchange rate may be more appropriately of the factors affecting foreign exchange rates in Bangladesh Parveen et al (2012) in their study named "factors affecting exchange rate variability in Pakistan" from the year 1975 to 2000. They uses statistical tests such as ADF, Linear regression specified Factors which influence the exchange rate Exchange rates are determined by factors, such as interest rates, confidence, the current account on balance of payments, economic growth and relative inflation rates. Fluctuations in exchange rates A market based exchange rate will changewhenever the values of either of the twocomponent currencies change. The higher a countrys interest rates, thegreater will be the demand for that currency. Factors that Influence Exchange Rates 11. Government Controls • Governments may influence the equilibrium exchange rate by: – imposing foreign exchange barriers, – imposing foreign trade barriers, – intervening in the foreign exchange market, and – affecting macro variables such as inflation, interest rates, and income levels.
Numerous factors determine exchange rates. Many of these factors are related to the trading relationship between the two countries. Remember, exchange rates are relative, and are expressed as a FACTORS AFFECTING THE FLUCTUATION IN EXCHANGE RATE OF THE BANGLADESH: A CO-INTEGRATION APPROACH (Rogoff, 2009). Factors affecting exchange rate can be economic, political, psychological and also the short run or long run. Behavior of exchange rate may be more appropriately of the factors affecting foreign exchange rates in Bangladesh
19 Oct 2015 CH4_Determination of Foreign Exchange Rates - Free download as Powerpoint Presentation (.ppt / .pptx), PDF File (.pdf), Text File (.txt) or view Factors Affecting FOREX. Rates Relative Inflation Rates Relative Interest 8 Key Factors that Affect Foreign Exchange Rates (2) - The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another. | PowerPoint PPT presentation | free to view 8 Key Factors that Affect Foreign Exchange Rates (2) - The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another. | PowerPoint PPT presentation | free to view
Parveen et al (2012) in their study named "factors affecting exchange rate variability in Pakistan" from the year 1975 to 2000. They uses statistical tests such as ADF, Linear regression specified Factors which influence the exchange rate Exchange rates are determined by factors, such as interest rates, confidence, the current account on balance of payments, economic growth and relative inflation rates. Fluctuations in exchange rates A market based exchange rate will changewhenever the values of either of the twocomponent currencies change. The higher a countrys interest rates, thegreater will be the demand for that currency. Factors that Influence Exchange Rates 11. Government Controls • Governments may influence the equilibrium exchange rate by: – imposing foreign exchange barriers, – imposing foreign trade barriers, – intervening in the foreign exchange market, and – affecting macro variables such as inflation, interest rates, and income levels.
In this video, learn about how the model of the foreign exchange market is used to represent the determination of exchange rates. 19 Oct 2015 CH4_Determination of Foreign Exchange Rates - Free download as Powerpoint Presentation (.ppt / .pptx), PDF File (.pdf), Text File (.txt) or view Factors Affecting FOREX. Rates Relative Inflation Rates Relative Interest 8 Key Factors that Affect Foreign Exchange Rates (2) - The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another. | PowerPoint PPT presentation | free to view 8 Key Factors that Affect Foreign Exchange Rates (2) - The exchange rate is defined as "the rate at which one country's currency may be converted into another." It may fluctuate daily with the changing market forces of supply and demand of currencies from one country to another. | PowerPoint PPT presentation | free to view Other factors affecting exchange rate movements Confidence—safe currencies considered attractive Technical factors release of national statistics seasonal demands for a currency slight strengthening of a currency following a prolonged weakness 3rd Feb., 2009 11 Factors affecting foreign exchange rates - prepared by: Walid Saafan