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Foreign Exchange Fundamentals |
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Some of the economic fundamentals that routinely affect foreign currency exchange rates are interest rates, inflation, trade balances, and government spending. There are also such non-economic factors, such as political events, world news, and market rumors that can determine the value of one currency against another.
Banks have been a traditional source of foreign currency, but traders may very well find pricing and service far better with non-bank financial institutions that specialize in foreign exchange transactions.
Trading currencies is partly a gamble. One way to reduce the problems associated with this gamble is to hedge the risk that the U.S. dollar might lose value against foreign currency. The most common means of doing this is with a forward contract. A forward contract is an agreement between a foreign currency supplier and a purchaser that details the amount of foreign currency to be purchased or sold, the exchange rate, the U.S. dollar total, and the value date, which is the date in the future when the foreign currency will be delivered. The drawback of this type of dollar-cost averaging is that the U.S. dollar may drop in value, making each foreign currency purchase more expensive than the previous purchase, and driving the cost of the foreign currency higher.
To avoid such costly measures, the European Union has standardized their currency by introducing the European currency (Euro), which has largely become the common currency of the European Union. While not all the local currencies of member states have yet to disappear, the primary economic and political objectives of introducing the Euro have been to eliminate exchange rate movements, promote trade and investment, reduce costs, and help promote cultural and political integration. The effect of the Euro on U.S. based meeting and incentive planners has a direct impact on domestic companies.
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| Symbol |
Rate |
| GBP:CHF |
2.007608 |
| GBP:JPY |
182.222212 |
| GBP:USD |
1.757198 |
| NZD:USD |
0.658397 |
| EUR:CAD |
1.503413 |
| EUR:CHF |
1.557680 |
| EUR:GBP |
0.775889 |
| EUR:JPY |
141.384148 |
| EUR:USD |
1.363390 |
| AUD:JPY |
80.415028 |
| AUD:USD |
0.775455 |
| USD:CAD |
1.102702 |
| USD:CHF |
1.142505 |
| USD:JPY |
103.700427 |
| USD:SEK |
7.185028 |
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History
