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how rate of exchange is determined …

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how rate of exchange is determined in foreign exchange market

Posted by Rashmi Gupta 6 years, 11 months ago

CBSE > Class 12 > Economics

2 answers

Ritik Bhusri 6 years, 11 months ago

Flexible exchange rate system where prices are determined by the free market forces of demand and supply for foreign exchange

Muskan Khatri 6 years, 11 months ago

when the demand of country's good or services rises in the international market, this leads to rise in value of own country. say exchange rate is $1 = ₹70... people buy shares or start investing in our country then the exchange rate will be in favour because of rise in demand.... rate will change to $1 = ₹65 ... Where as if people start extracting their interest or do disinvestment then the exchange rate will be in the favour of dollars because of fall in demand, it will lead to $1= ₹75.. or so thus rates fluctuate every minute,..... and we count the rate at the end of the day.

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