Cryptocurrency Q&A
How are free exchange rates determined?
How are free exchange rates determined?
Giulia
Sat Oct 12 2024
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7 answers
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I'm wondering how free exchange rates are actually determined. I want to understand the factors and mechanisms that influence these rates in the global market.
7 answers
SakuraSpirit
Mon Oct 14 2024
Economic factors play a significant role in shaping the supply and demand dynamics of currencies. Inflation, for instance, can erode the purchasing power of a currency, leading to a decrease in demand and subsequent depreciation.
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Tommaso
Mon Oct 14 2024
Interest rates are another crucial economic factor that influences exchange rates. Higher interest rates in a country make its currency more attractive to investors seeking higher returns, increasing demand and leading to appreciation.
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CryptoElite
Mon Oct 14 2024
The global foreign exchange market is the arena where exchange rates are ultimately determined. These rates reflect the relative value of one currency against another and are subject to constant fluctuations.
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CryptoDynasty
Mon Oct 14 2024
Geopolitical events can also have a profound impact on exchange rates. Political instability, conflicts, and trade disputes can all disrupt market sentiments and lead to sharp fluctuations in currency values.
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Riccardo
Mon Oct 14 2024
The primary forces that drive these fluctuations are the supply and demand of currencies in the market. When there is an excess of a particular currency, its value tends to depreciate, while a shortage leads to appreciation.
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