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Australias Exchange Rate - Term Papers

Australias Exchange Rate

What is an exchange rate? What factors determine the exchange rate for the Australian dollar?
An exchange rate is the ratio at which a country's currency exchanges for the currency of another country. Exchange rates are typically expressed as the foreign currency equivalent of one unit of domestic currency. The exchange rate between Australia and the United States for example was $A1.00 = $US0. , (as of 2.12.99). The exchange rate is determined by the demand for, and supply of, that currency in terms of other currencies.
The major trading countries of the world use a system of floating exchange rates. Under this system, exchange rates are determined by the free market forces of supply and ...

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pay us for various services, such as repay loans. Those who have Australian dollars and want to use them to buy foreign currencies provide the supply of Australia dollars. These include Australians who want to buy imports from overseas, Australian tourists going overseas, Australian banks and firms lending or investing money overseas, and Australians paying for various services from overseas, repaying loans and paying interest on loans.
There are a number of factors influencing the demand for Australia's exports. Relative inflation rates are just one factor. To be competitive on international markets, a country's exports must be at least as cheap as the same goods and services supplied by producers in other nations. Any change in domestic prices relative to those in other countries will alter the international competitiveness of local industries. If Australia experiences high inflation rates relative to other nations, exports will become more expensive and therefore less ...

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Australias Exchange Rate. (2008, July 21). Retrieved November 22, 2024, from http://www.essayworld.com/essays/Australias-Exchange-Rate/87129

"Australias Exchange Rate." Essayworld.com. Essayworld.com, 21 Jul. 2008. Web. 22 Nov. 2024. <http://www.essayworld.com/essays/Australias-Exchange-Rate/87129>

"Australias Exchange Rate." Essayworld.com. July 21, 2008. Accessed November 22, 2024. http://www.essayworld.com/essays/Australias-Exchange-Rate/87129.

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PAPER DETAILS

Added: 7/21/2008 09:41:07 PM
Category: Miscellaneous
Type: Premium Paper
Words: 1167
Pages: 5

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