How Often Do Exchange Rates Change

Nowadays, foreign exchange rates have become one of the essential factors to determine a country’s economic health. As it provides an opportunity for financial stability, exchange rates are consistently monitored and analyzed due to its fluctuating tendencies. Thus, when sending money abroad, you need to take a look at the exchange rates now and then.

If you want to know the perfect time to transfer money overseas, read on as we’ll discuss how often do exchange rates change.

What Does Foreign Exchange Rate Mean?

As defined, a foreign exchange rate is known as the price of a country’s currency against the currency of another state. In other words, it’s the value of the domestic currency in terms of another currency. Foreign exchange transactions happen on the market called as Forex market.

It’s the largest market across the globe composed of a network of brokers, individual traders, and financial institutions.

On the other hand, foreign exchange rates change over time. Maybe that’s because currencies around the globe fluctuate depending on the demand, supply, and other factors. If, for instance, you’re sending money abroad from Australia, you can compare exchange rates on sites like this to help you find the right money transfer for your needs.

Do Exchange Rates Fluctuate More Frequently?

To address the question of how often do exchange rates change, the answer isn’t daily, but it’s more frequently. Meaning, the foreign exchange rates don’t change on a daily basis. Instead, they tend to fluctuate every second. For instance, the dollars to euro exchange rate may increase or decrease within the 24-hour period. The reason for frequent changes is that the forex market never closes, even at midnight. Causing the foreign exchange rate to change regularly. Websites like the currency shop can help provide a comprehensive comparison of exchange rates.

Aside from the forex market’s liquidity, exchange rates can also change frequently due to a variety of factors that can impact the variations in their values from time to time.

Below are the reasons why forex rates vary so quickly:

1.    Political Performance

 As you may know, a country’s political stability has an impact on its international performance as well as currency strength. If your nation has less political issues, it can attract more foreign investments.

And with the proliferation of foreign capital, there may be a boost in the value of your domestic currency. It’s essential to remember that a nation with less political issues may have to deal with a decrease in the currency value. Thus, check the political performance of your country now and then to know if there are exchange rate fluctuations at the time you’ll make a money transfer abroad.

2.    Terms of Trade

Another reason why the foreign exchange rates change frequently is the country’s terms of trade. It’s the relationship between export and import prices. If the export prices are higher, the country’s terms of trade are in better condition. As a result, the state will gain higher revenues, causing an increase in the value of its currency.

All in all, the improved terms of trade leads to a rise in the exchange rate. So, find time to check your nation’s import and export prices before sending money internationally to see if there are changes in the value.

3.    Inflation and Interest Rates

Changes in the exchange rates are also caused by inflation and the rate of interest. When the interest rate increases, the value of the domestic currency also increases, making an appreciation on the exchange rate too. On the other hand, a decrease in the interest rate causes the currency value to decline and affect the forex rates.

Moreover, when there’s inflation, foreign investments will slow down, and when it does, the exchange rates will also experience fluctuations. All the more, it’s best to learn how to read and calculate currency exchange rates to ensure you’re financially prepared at the time you’ll make the money transfer

4.    Fast Moving Global Economy

When the global economy is moving quickly, the exchange rates will also change constantly. With more events emerging internationally, like the merging between two businesses of different countries, the world economy moves fast, causing each currency’s value to change.

5.    Government Debts

If your nation has several government debts, it’s less likely to obtain foreign capital, which results in inflation. In such a case, foreign investors may end selling their bonds in the event the market finds out government debts within a particular nation. Consequently, the value of the exchange rate may be strengthened or weakened.

Conclusion

With all this information in mind, no doubt the exchange rates change more frequently. If you send currency abroad, being aware of the factors mentioned in this article will help you determine the best time to make an online money transfer internationally.

Also, it’s important to note that exchange rates may change from time to time, depending on your nation’s economic growth.

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