Exchange Rate

The definition of exchange rate: The price of one currency in terms of another currency or currencies.The exchange rate is very important for a country,it affect the trade in the country,for example import and export even the GDP of the country...

So let's have a look what may influence EXCHANGE RATE .

• Interest rate : because in a country if the interest rate is high more people will save their money also people from abroad will likely to save money in your bank because if they do they can get more interest( money) in the same period of time compare with if they save the money in another banks.So because of that the value of the currency of the country will increase because the demand of this currency increase.

So that's why interest can influence exchange rate.So after we know these we can try to analyse about some situations.If the exchange rate goes up the import will be cheaper and maybe will be more .export will be more expensive so maybe the buyers will be less.And if the exchange goes down import more expensive export will be cheaper.

So because of that, exchange rate also influence the trade balance.It can help to decide how many import should we buy and how many export we have to sell therefore we can have a balance surplus.

Okay that's almost all what I know about exchange rate . And I wanna say I did my work everyday.Except the blog because Just like unemployment I had done one blog about Inflation.So I didn't do it....So Mr,chris, Please don't say you will not do anything any more... = =