It is necessary for a traveler to visit the currency exchange, if he/she is traveling to foreign countries. The currency of his country is exchanged against the currency to which it is pegged.
The exchange rate of the currency can be determined in two ways: fixed rate and floating rate.
Explanation:
The currency exchange is a business that has the legal right to exchange the currency of one country with the currency of another country. This type of business is known as foreign exchange market.
It is necessary for a traveler to visit the currency exchange, if he/she is traveling to foreign countries. Each and every country has unique currency system. It is necessary to get the currency of the country we are visiting.
The exchange rate of the currency can be determined in two ways: fixed rate and floating rate.
The exchange rate of the currency is decided by the government based on the market force and geopolitical condition.
Currency exchange can be defined as a company having legal rights regarding the exchange of currencies of different countries. While traveling to a foreign country having a different currency.
A traveler needs to visit currency exchange to obtain the currency of the respective country in exchange for his own currency because:
1. This is important to facilitate transactions in foreign countries and
2. To smoothen buying and selling in those countries.
The rate at which domestic currency is exchanged with foreign currency is called the exchange rate. Exchange rates can be fixed or floating. Fixed or pegged rate is determined by the government through its central bank. And floating rates are determined by the market forces of demands and supply.
There is a number of factors that affect the determination of exchange rate such as: inflation, interest rates, public debt, political stability, economic health, the balance of trade, current account deficit, speculation, government intervention, etc.
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