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Currency value,euro exchange rates today bank of america,learning forex - You Shoud Know>

A currency’s value in the world marketplace reflects whether individuals and governments are interested in using it to make purchases or investments, or in holding it as a source of long-term security. Some currencies, like the US dollar, the Swiss franc, and the euro, the currency of the European Economic Union, are relatively stable in price, reflecting an underlying financial and political stability. Some other currencies experience wild or rapid changes in value, the sign of economies in turmoil as the result of runaway inflation, deflation, defaults on loan agreement, serious balance-of-trade deficits, or economic policies that seem unlikely to resolve the country’s problems. Currency values of even the most stable economies tend to change over time as traders are willing to pay more — or less — for dollars or pounds or euros or yen. Governments usually want their currency to be stable, maintaining a constant relative worth with the currencies of their major trading partners.

Other times, a currency is deliberately devalued or is kept from floating against other currencies if a government decides to keep the value of its currency low, often to make its exports more competitive.
Currency cross rates are the trading prices of the basic units of seven major currencies, including the euro, in relation to each other. Since 1971, when the gold standard was abandoned, currencies have floated against each other, influenced by supply and demand and by various governments’ efforts to manage their currency. Sometimes they interfere with market forces — buying up large amounts of their own currency, putting more currency into circulation or lowering interest rates — to achieve that goal. What it does not reflect is trade between emerging markets or between emerging and developed markets, where currencies such as the Chinese yuan have a major impact.

Some countries, for example, have sought stability by pegging, or linking, their currency to the value of the US dollar. Thus, its currency’s relative value sits 66% below the value of the AUSD, which is a huge competitive disadvantage for Australia.

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30.08.2014 | Author: admin

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