determinants of exchange rates of dollar & euro

1. PRESENTED BY:
Himani Shukla
Harsimran Singh

2.  In finance, an exchange rate (also known as a foreign-exchange rate, forex
rate, ER or FX rate) between two currencies is the rate at which one currency will
be exchanged for another.
 Exchange rates are determined in the foreign exchange market, which is open to a
wide range of different types of buyers and sellers, and where currency trading is
continuous
 At the beginning of 1999, the was launched as a common currency in 11 European
Countries

3.  Dollar (often represented by the dollar sign $) is the name of more than
twenty currencies, including (ordered by population) those of the United
States, Canada, Australia, Taiwan, Hong Kong, Singapore, New
Zealand, Liberia, Jamaica and Namibia
 The U.S. dollar is the official currency of East Timor, Ecuador, El Salvador,
Federated States of Micronesia, Marshall Islands, Palau, the Caribbean
Netherlands, and for banknotes, Panama. Generally, one dollar is divided into one
hundred cents.

4.  The euro (sign: €; code: EUR) is the official currency of the Eurozone, which
consists of 19 of the 28 member states of the European
Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Irel
and, Italy, Latvia, Lithuania, Luxembourg, Malta,
the Netherlands, Portugal, Slovakia, Slovenia, and Spain
 The euro is the second largest reserve currency as well as the second most traded
currency in the world after the United States dollar

6. Long term factors
 Balance Of Payments
 Interest Rate
 Inflation
 Money Supply
Short term factors
 Central bank intervention
 Foreign investment flows
 Political factors
 Capital movements

7.  When a country's exports are high, the buyers of these exports need its currency
to pay for those exports.
 When the country's central bank increases interest rates.
 When the demand of the currency is high in foreign exchange market.
 Due to Government borrowing or loosening of fiscal policy.

8.  There is a fall in the world price of a country's major export.
 A deficit on the current account of the balance of payments leads to a net outflow
of currency.
 A country's central bank reduce monetary policy interest rates, leading to a net
outflow of money.