Thursday, May 11, 2017

How Do Currency Exchange Rates Work

How Do Currency Exchange Rates Work

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As many international travelers get ready for that next trip abroad, do you ever take a moment to understand how exactly currency exchange rates work?

The exchange rate between two currencies is the price of a country's currency in relation to another currency. This is called a currency pair, and one of the most common currency pairs for example would be USD/EUR. 

  • How to Read a Currency Pair?

Every currency pair consists of two currency codes, and each code represents a specific currency of a country you’re looking to exchange your currency into. For example, when you see the currency pair USD/EUR, reading this correctly would mean ‘x’ amount of US Dollars (USD) against ( / ) ‘x’ amount of euros (EUR). 

  • What Makes Your US Dollar worth More than Another Currency?

In this crash course video you’ll learn more in-depth knowledge about imports, exports and exchange rates to better understand how globalization and free trade increases overall wealth. In addition to import and exports, the other factors for free-floating currencies are typically:

  1. Geopolitical events such as international policies, wars and conflicts
  2. Economic trends such as GDP, employment rate, and international trade
  3. Good old fashion speculation. Trillions of dollars’ worth of currencies are trading hands every day and the supply and demand of these currencies continue to move the currency rates



  • What Currency Exchange Equation Should I Use?

If you’re looking to sell your foreign currency in exchange for US dollars, then you would use the following equation with CXI’s exchange rate to calculate how much US dollars you would receive:



If you’re looking to buy foreign currency with your US dollars and you’re given CXI’s exchange rate, then you would use this equation to calculate how much US dollars you would need to get the foreign currency you need:




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About Currency Exchange International
Currency Exchange International (CXI) is a leading provider of foreign currency exchange services in North America for financial institutions, corporations and travelers. Products and services for international travelers include access to buy and sell more than 90 foreign currencies, multi-currency cash passport’s, traveler’s cheques and gold bullion coins and bars. For financial institutions and corporations, our services include the exchange of foreign currencies, international wire transfers, global EFT, the purchase and sale of foreign bank drafts, international traveler’s cheques, and foreign cheque clearing through the use of CXI’s innovative CEIFX web-based FX software www.ceifx.com

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Posted By Jacquelyn McMullen at 02:00 PM
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