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About the video:
You may have traveled a lot and wondered why you get more of one currency when you exchange it for another. If so, you have witnessed exchange rates in action, but do you know how they work? Watch the video to find out what exchange rates are, how to convert between them and the different systems which determine a currencies exchange rate. Historically the gold standard system had been used, which fixed currency to a select value of gold, held in a vault. The three main systems are the floating, managed and fixed exchange rate systems. The floating system has minimal government intervention, using supply and demand to determine the exchange rate. The managed exchange rate is allowed to be within a permitted band and a fixed exchange rate is usually pegged to a currency with the interest of being competitive in the international market. The video explains this in more detail and with helpful picture to guide you through the subject.
example gpb/usd now 1pound= 1.30$ if great britain exports 1million worth of goods to the usa and usa export 300thousand worth of goods to great britain how much cents will it incress? or simply how much is the pound worth now?
The key to understanding exchange rates is to understand how the bureaucracy works.
Can you explain that please? E.g. a tourist lands in a country and exchanges foreign currency for local tender.
The transaction is registered to the reserve bank. But what then?
Is the local reserve bank linked to all other reserve banks, and updates on all ledgers take place in real time?
For example if the government borrows money increasing the money supply, does that also effect the parity in real time as that money is dispersed and multiplied?
I mean how large must the servers be to handle all that data? Is that done by the bank of international settlements?
Wouldn’t certain people be in a position to speculate based on that info? Specially in smaller countries with a small banking cartel.
So really it’s about who gets what information first essentially?
The interbank market also then operates based on market info knowing what prices to set then I take it? But wouldn’t the reserve bank have all that info at their disposal, and if it’s private and global then why wouldn’t the owners speculate or use that information to control geo politics?
I suppose they do though.
It’s kind of like the diamond monopoly.
Is there any difference if someone goes to bank and change is local currency for whatever purpose and the foreign exchange done on online platforms which is done mainly to profit?
Am very confused if there are the same thing
There are supply of money and demand of money. What I can understand after studying an economic book myself is that the more you demand, the higher the value, or appreciates, ceteris paribus (others stay constant)
Take MYR-RM and USD-$ for example. To purchase a Malaysian made item, an american needs to exchange his $ to RM and that is a demand of RM. When people starting to increase buying items made in Malaysia, higher demand of RM will eventually drive the value of RM up, since it has become ''rarer''. However, when people started to reduce the import of Malaysian item, lesser demand for RM would occur, therefore, depreciation of RM happens, since theres more RM in the market, it becomes ''common''. A fixed exchange rate means that under the manipulation of the government, the currency wouldn't rise or fall in value. For example, when the currency appreciates, government would need to make the money less ''rare'' by injecting more local currency into the market, to maintain the fixed value of the currency. For the depreciation of currency, government uses foreign reserve like other currency and gold to purchase own currency in order to lower the circulating of local currency in the market. For managed currency, government sets 2 points called ceiling and floor to manage the over dropping and over rising of the currency value. The currency is allowed to ''float'' in a certain point, up and down but if reached the ceiling and floor point, government will take action as similar to the fixed exchange rate.
(I might be wrong, feel free to correct me).
And also fking buy RM our currency is depreciating tremendously. :)
Could a country print its currency secretly, having duplicates notes (same serial number) and then make some citizens go around the globe and exchange the currency for any different country? Expending that amount abroad wouldn't create inflation in the original country, and you would have much more wealth( from the asset bought abroad) and everything would turn out of printing out simple paper.
Would that scam work?
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Bull shit explanation ask how come 21 trillion defecit currency is so strong are you willing to talk real sense of logic well let me remind most so call big countries sitting with GDP ratio is big defecit now explain how do auditing done of these bankers moves ROTH CHILD CARTEL'S CONTROL ALL THESE BANKING SYSTEM DON'T TRY BOOK BASED NONSENSE EXPLANATION WE UNDERSTAND SHIT OF YPUR MANUPLITATED FIGURE'S 🐒😇😎??
+Jim just think if you move from India to USA while the currency is about 65₹ per dollar and when you return India if it is 70₹ or above per dollar then we get more right? If you take 65 rupees from India when the currency is 65₹=1$ so we get 1 dollar, then if we return from USA with 1$ while the currency is high like 70₹ per dollar so we get free 5₹
Am i right? I'm not sure i think there will be some adjustments
I don't think you explain it simple enough. I don't know anything about business and I can't understand it after watching your video. There's some channels that make me understand what GDP per capita is even though I'm not from a business background
if you guys cant get simple things. and understand i suggest you to throw away your mobile phone cuz you are getting Facebook Dumb
Brain Washed.. and Life washed so you washed your lifes away.
you brains is full of shit . Please go to nature and empty your mind.
Why the value of US dollar is below Euro's value? Is it more profitable from the exports point of view? It means the goods are produced to a lower price (dollar) and sold to a higher price (Euro). A lower value of a certain currency could mean a higher exports value? Than, why Euro and GBP are kept to a higher than dollar?
Cause the pound and the euro is in higher demand that the U.s dolar, because of the free trade agreement in the Eu, alot of trades occur and demand for each currency is alot higher than others. So it's more 'expensive" than the dollar
Nope, you can't do in 5 minutes what at best takes 10, probably 20 minutes, and that's supposing the viewer has at least a foundational understanding of macroeconomics.
Of course, you could have gone with the whole Americans buying French Wine thing. That is, say there is an increased demand for French Wine from people holding US dollars, but not from people holding the Franc. This demand would cause some price pressure on the overall wine market, but in this instance more of the price-pressure is from the US dollar. Ordinarily, one might just raise the price overall, but because the main sector of the French Wine Market is from France (I assume), raising the price on everyone would cause the Franc holders(yeah, I know Euros, it's an example) to pick up more of the demand-price increase than is a true reflection of the market. So if there is a necessity to hold the current price in Francs, then it would be better to devalue the US dollar at the Foreign Exchange Bank. Of course, the actual value of the exchange rate is determined not only by the multitude of trade relationships taking place, but it is also influenced by speculators based on their own belief in future values derived from various individual pricing models.
For the record, I've left out how the value of a currency is initially determined, and probably a lot of other things, but my attempt was only to show the very narrow window of the basic idea why exchange rates vary without getting too complicated.
I hope that helped. Peace.
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Thank you for your video!! Oober Wallet presents the fastest way to exchange currency & cryptocurrency. Find more on https://www.youtube.com/watch?v=FIrHzoLXqNk It can be interesting for you. Ask any questions in comments.
So does this mean the pay grade or the stability of salaries in one country will affect the currency in other countries? For example, if the US government creates a number of new jobs, how will that affect the currency in Turkey?
For holding and trading foreign currencies basically, Forex trading accounts used. With a broker to open a trading account the process is and then invest some money and after that as a pair start buying and selling currencies. With Forex4you I had open my trading account. Opening a trading account with a good trading broker is very important to make the good amount of profit. Through this exchange business, the process is to make the profit.
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When they fix, the central bank just keeps it fixed against another currency at the desired amount by buying or selling its own currency using foreign currency. Doesn't matter if the othet currency is fixed or floating. If the government says your currency is fixed, they will do whatever it takes to fix it. If it depreciates away from fixed price, they will buy their own currency using foreign currency. If it appreciates from fixed price, the government will sell their own currency and buy foreign currency.
At 2:10, did the US sell their exports to China? Is this why the US dollars fell in value to China’s Yuan which led to a rise in demand for Yuan? Or is it the other way round?
Also, when the Dollar to Yuan fell in value does this naturally mean that the Yuan to Dollar rose in value?
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Been trying to wrap my head around it, been looking at different values and how some countries are basically worthless (1.00 USD = 35256.79 IRR/22717.96 VND/20746.09 STD) How are these numbers even possible? Heard someone talking about a country that is worthless but is the highest exporter of oil in that region and it got me wondering.
Those were Supply and Demand graphs... Look around for some basic econ videos, or even just "Supply and demand" videos. I think this video was well done for the sub-5 minutes that they used. To explain Supply and Demand as well in this video would, I think, make it a bit too long, and would end up being too much "new" information for most people. Basic Supply and Demand isn't difficult to understand, I would definitely recommend watching videos on that. There are a lot out there.
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Can you help someone holding Iraqi currency what they should be doing? I have no idea how to figure out what 200000.000 Dinar would be in USD. Think currency for idiots. my knowledge is just below that. Thank you & if possible, bless you!!
Thanks for the video. For the beginners it is very important to know how exchange rate works. This video explains it simply and in best way. I want to suggest every beginner trader to watch this video who still confused about how exchange rates work and for them also who want to know about exchange rates. Looking for more this kind of videos. I am also a forex trader and dealing with ECNCAPITAL.
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