exchange rate - how often does it change

Posted on 2012-03-28
Last Modified: 2012-04-03
does the exchange rate change once per day or more often..
Question by:25112
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Assisted Solution

TempDBA earned 333 total points
ID: 37780251
Each country, through varying mechanisms, manages the value of its currency. As part of this function, it determines the exchange rate regime that will apply to its currency. For example, the currency may be free-floating, pegged or fixed, or a hybrid. A floating exchange rate, where the market dictates movements in the exchange rate; a pegged float, where a central bank keeps the rate from deviating too far from a target band or value; and a fixed exchange rate, which ties the currency to another currency, mostly more widespread currencies such as the U.S. dollar or the euro or a basket of currencies.
                               A market based exchange rate will change whenever the values of either of the two component currencies change. A currency will tend to become more valuable whenever demand for it is greater than the available supply. It will become less valuable whenever demand is less than available supply (this does not mean people no longer want money, it just means they prefer holding their wealth in some other form, possibly another currency).


Author Comment

ID: 37781729
so let's say USD to Canadian exchange rate
it may be 1.01 at 10am 1.04 at 11am and 0.99 at noon?
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Assisted Solution

TempDBA earned 333 total points
ID: 37782699
Yup if there is no bilateral agreement between both the countries to fix the exchange rate between so many days, etc. If it is floating, then yes.
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LVL 25

Accepted Solution

nickg5 earned 167 total points
ID: 37783907
When I travel to Asia and I am standing in line at a bank to exchange my U.S. dollars for the local currency, there is a board or a display that shows the exchange rate from, for example, dollars to Filipino pesos. If I am in line for 30 minutes they rate does not change on the digital display, so my experiences is that it does not change every minute, hour, or day.
Now, if there is a crisis of some kind and one currency or the other is moving quickly, then yes, a change is warranted.

If you always have a laptop with you, there are universal currency exchange converters, just use Google.

Author Comment

ID: 37801964
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Expert Comment

ID: 37801981
Thank you.

May you always get the best exchange rate when it is time for you to exchange your monies (ha ha)

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