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theory of the exchannge rate

Macroeconomics lesson – how do the exchange rates fluctuate

Recently I took a course in macroeconomics which proved extremely useful for my economics know-how. Among other things, I (and found out about how the exchange rate interacts with a national economy. This is very interesting stuff for all the forex traders, so just have alook and let me know how it looks for you

One critical driver of external demand of goods and services from a national economy is the exchange rate. The exchange rate sets the price of one currency in terms of another: for example, if the £/$ rate is 1.50 it tells us the US dollars needed to buy £1 – that is, $1.50. The exchange rate is fixed daily in foreign exchange rates across the world. Changes in the exchange rate have a big effect on cross-border spending, that is, on exports.Read More »Macroeconomics lesson – how do the exchange rates fluctuate