The Monster Traffic Way Of Currency Exchange
In the advent of globalization, "the name of the game" is not
money alone. Can we include currency exchange? In historical
times, the mode of exchange is by bartering a valuable object
with the desired other object. Currently, this may exist
informally but vaguely, an item for sale would more or less be
worth a sum of money.
But as the world transactions come in complexity, where the
value of an economy is determined by the amount of its reserved
wealth, money is a very broad traffic in commerce and all walks
of living. Currency exchange comprises the biggest transaction
in the world market. Each country has adopted its own unit as
home currency, but with their independence from each other, they
differ in economic standing based on many factors. The worth of
their currencies against the other is the EXCHANGE RATE. Foreign
Exchange goes with the acronym FOREX.
To understand the value of home currency, it is always
comparable with another currency foreign to it. The most common
way of expressing it is by Price Currency. A very simple example
figure is this:
1 US Dollar ($) = 0.69 British Pound Sterling
The fluctuation of a currency is solely based on the demand of
its supply. The more transactions are made with it, the more it
becomes valuable. If there is less demand for the currency, it
devalues fast, thus it will have an impact on its rate value.
Primarily, this is observed generally in terms of country's
economic standing. If its people have the most employment, there
are more needs for commodities and supplies that businesses are
revolving as well as it use of money. Once currency is valuable,
the interest rate is high which can also attract other investors
to take chance on buying it.
A powerful currency would mean consistent price rate that does
not devalue in a long period of time. In playing the game with
foreign exchange buying, sometimes it is difficult for banks
themselves to control those who manipulate them into selling the
reserves, which in a way have impact on the country's financial
status. Several scenarios make a great decline of currency value
like political uncertainties, unemployment that leads to higher
inflation, other relevant issues that can hamper commerce and
business from functioning well, and other macro-economic
situations.
So far, the five most traded currencies in the world are the
following:
- US Dollar - Euro - Japanese Yen - British Pound Sterling -
Swiss Franc
EURO, a new currency that hit the market after its birth in
1999, is almost speculated a threat to US dollar. And yet the
latter (US$) is still the highest with its 89% rate of world
transaction, which dwarfed the rest to the fraction left. Still,
no matter how insignificant a certain currency may be, the
monetary flow is a big volatile traffic that literally flows
like liquid around the world though it may seem unnoticed.
It may appear that Foreign Exchange Retailing seem to have "the
edge" in terms of acquiring currencies, but actually, it turns
out that there should be ways of marginalizing these businesses
to balance the flow of currency exchange, which in a big
overview, these retailers may take hidden charges for their own
gain.
Without noticing, it is clear that no matter how small
transactions are, negotiations play a big part on currency
exchange jam, which any civilized world has embraced for
centuries.