Stuck in foreign exchange assignments? Know how to solve them right away!
Students dealing with commercial subject often face problems while solving foreign exchange rate homework answers. To get them acquainted with the foreign business market professors of various institutions gives these assignments on foreign exchange. However, if students do not understand the actual function of the currency rates, they will not be able to solve the case study related assignments.
Thomas Jefferson once said, “Information is the currency of democracy.†Similarly one you get frequented with the currency rates you will also understand the way a country deals in their economy. Understanding foreign exchange rate can also make you a great forex trader and thereby bringing in more profit into your bank account.
However, as a student, people opting for homework answers must first start with the ground rules. Before going deeper in forex rates it is best to know a little about it.
What is the meaning of Exchange Rate?
For every student searching for foreign exchange rate homework answers has to know the meaning of ER. Exchange rate (ER) is the price of currencies of a nation compared to another nation’s currency. And that is how exchange rate is comprised of two basic components:
- Domestic Currency
- Foreign Currency
- Direct Quotation: the value of a foreign currency’s certain unit that needs to be expressed against domestic currency.
- Indirect Quotation: this is just the opposite and thus the value of a domestic currency’s certain unit that requires to be expressed against foreign currency.
Another important part of the exchange rate is cross-currency or often known as cross rate. When the exchange rates do not contain a domestic currency between the two types of currency components then it is termed as cross rate or cross currency.
Now comes the most important takeaway for scholars-
Why do you need to know foreign exchange rate?
In today’s world institutions look trains students in the best possible modern ways. And that requires them to understand the real field situation. Therefore when mentors give them foreign exchange rate homework answers, it is with the motto of enhancing their knowledge. Following are the importance for young scholars to know foreign exchange rate:
- Better understanding of currency fluctuations and difference between nation currency rates
- Understanding factors that affect currency rate
- With the help of foreign exchange rate knowledge students can very well solve problems related to forex trading
- If someone wishes to trade in foreign exchange market it becomes easier for them to carry out business by knowing the foreign exchange rate
- Career options of business analytics, forex broker, forex trader, business diplomat etc. opens up to the students
After knowing the important take away for you it is time to go deeper into the subject. The most important role that foreign exchange rates play is in the field of international trade.
What is the role of foreign exchange rate in international trade?
In the era of globalization everyone needs to know the rates for proper business transaction. And with the emerge of this open foreign lands people indulge more and more into buying & selling of goods & services.
Every nation or the people of a nation when buys goods and services from foreign land they require to make a payment and this transaction is termed as foreign business.
For example when an American woman buys French perfume, it requires the transfer of the particular perfume from France to America. During this movement the payment is done.
Students going through foreign exchange rate homework answers must know this system. Now when one material is sent off to the foreign land it is known as export and the material entering the domestic territory is called import. This is where the foreign exchange rate plays their essential role.
These payments and the flow of money direction are determined by the currency rates which in return fix the value of a certain goods & services. So while you solve the problems in your assignment related to international trade, this knowledge of what role foreign exchange rate plays will help you out.
You might also come across such problems in your assignment that will require you to know the differences caused in foreign exchange rate.
What causes fluctuations in foreign exchange rate?
- Inflation Rates: when there occurs a change in the market inflation it is likely to cause serious changes in the currency rates. However it is directly proportionate and countries with a lower level of inflation rate will automatically have a higher rate of currency value. When the inflation in a country is low, it will benefit with a slow rate of price hike of goods and services.
- Interest Rates: Changes in rate of interest affect foreign exchange rate. When lenders impose higher interest rates they are actually bringing in more capital from the foreign market. And you should also know that rate of interest, foreign exchange rate are
- Government Debt: a country that has government debt will not be able to gain enough foreign capital thus resulting in inflation. During this time foreign investors often sell out their bonds if government debt predictions are done. Thus it leads to a decreased value of that country’s exchange rate.
- Trade Terms: Students looking for foreign exchange rate homework answers should always know the important role of trade terms in exchange rate. These terms of trade are mostly related with balance of payments and current accounts. It is the ratio of export prices is to import prices. These terms fall under the country’s favour when prices of export item is more than import item goods or services. Thus leading to better exchange rates.
- Recession: Currency rates fall when a country goes through recession periods and thus it hampers the foreign capital acquisition. And thus it so happens that country’s currency loses value in the foreign market.
Therefore, as you go on to analyse these factors mentioned above you are likely to get your answers. The foreign exchange rates play a very important role in the global economy. And as a student of commerce, you must understand the various terms and conditions associated with it. It will result in finding better foreign exchange rate homework answers.
