No currency in the world, by definition, can be stable and indestructible. Its value is influenced by many external and internal factors. Even if no serious political and economic actions are taking place inside the country, dollar exchange rate everything will still fluctuate a bit. This is especially evident in exchange offices and reports in the banking system.
Why do people exchange currencies
The main function of international exchange is foreign economic activity. As a rule, another country settles with its supplier in its own currency, or uses one of the easily convertible currencies for this purpose. But, to work within your country, you need national money. In addition, the exchange is necessary for other reasons:
- The ability to save capital in a more reliable currency of the world.
- Purchasing goods or services in another country.
- Return of loan funds to a foreign bank.
- Sharp political or economic processes within the country.
- Global crisis and the need to preserve capital.
Under normal conditions currency exchange occurs only by reason of the performance of trade transactions. The more often one of the currencies is used as an exchange, the stronger its rate on the world market.
Why does the currency become more expensive or cheaper
As mentioned above, any, even a minor event in the world affects on the exchange rate, both within the country and abroad. But, there are several fundamental events that best demonstrate how the dollar exchange rate can change rapidly in relation to other monetary units:
- natural or artificial inflation within the country;
- credit or the interest rate for loans to entrepreneurs;
- increased domestic demand for foreign currency;
- rapid economic growth caused by various events;
- general economic performance in various areas activities.
The economic downturn and misguided political activities also negatively affect the stability of the currency of their country. As soon as this happens, the demand for dollars and other, more stable currencies of the world skyrockets. Even internal regulation of sales does not always save the situation with an economic downturn.
