Foreign Exchange Rates Basics

Learning foreign exchange rates basics assist you to understand where your business interest stands within the international markets. The exchange rate itself is a ratio that shows the level of one country's currency is worth when it comes to another country's. Even though it gives people quick idea of a country's relative financial strength, the exchange rate is influenced by a complex set of things that can be incomprehensible, especially when developing nations and countries whose financial systems differ from that relating to the U.S are involved.

To understand exchange rates, it's helpful to know about the different factors that affect the a currency's value. Central banks like the U.S. Federal Reserve have the most control over the rate, but a number of other circumstances play a job in its change also, including inflation and foreign policy. As soon as you're knowledgeable about the exchange rate basics, you can trade currency on the foreign exchange market and strengthen your business' international presence.

1. Inflation, fiscal policy and economic development have significant impacts on foreign exchange currency rates.

2. Many internet websites post live foreign exchange rates and offer influential currency converters.

3. Currencies are traded around the foreign exchange, or FX, market.

More action for Re: RBI frees int rates on NRE deposits

The Central Bank has deregulated interest rates on Non-Resident External (NRE) deposits and Non-Resident Ordinary Rupee (NRO) accounts. This is a big move. It refers to the interest rate given on all the foreign deposits that get converted into rupees. At the moment, the ceiling is LIBOR plus 100 basis points. Now, there is absolutely no limit. You can pay only amount of interest, if you want to attract dollars. Basically, that is the statement that the Reserve Bank is making.
The NRE account is actually repatriable. Therefore, it gets some bit of a tax advantage as well because that money goes out, whereas the NRO account is the one that stays on. It is repatriable, it has USD 1 million repatriability. It has some limit of repatriability. It is money that stays back. It is normally taxable like all our savings rates.
Now, if the limit is removed, chances are that banks will treat it like any other savings account. It?s actually a savings deposit. So, chances are they may now raise it to 4% which is very good.
Where are dollar holders anywhere in the world getting 4%? The FED rate itself is 0.25%. You get next to nothing, if you have dollars in your hand. Here you are able to get, if you convert into rupees, atleast 4%. Chances are that you are going to see dollar flows.