Saturday, October 24, 2015

How Currency Exchange Rates Are Determined

Key excerpt:

"Currency rates of exchange appear to be moving in response to so many factors that it makes it almost impossible to ascertain where the rate of exchange is likely to be headed.  Rather than paying attention to the multitude of variables, it is more sensible to focus on the essential variable.

As far as currency rate of exchange determination is concerned, this variable is the relative changes in the purchasing power of various monies. In short, it is the relative purchasing power of various monies that sets the underlying rate of exchange." 

Read more here: How Currency Exchange Rates Are Determined | Mises Wire

No comments: