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The foreign exchange market sets the exchange rate between currencies. Factors such as unstable governments or national disasters can cause fluctuations. Interactive currency calculators can be found online, but the rates quoted may not be official.
The foreign exchange market is the largest financial market on the planet. Basically, a consortium of world banks, this consortium / market sets the exchange rate, known as the exchange rate, the FOREX rate. The exchange rate is, in the most basic terms, how much a nation’s currency is worth relative to all other national currencies.
Currency is, of course, money. The exchange rate evaluates how much a dollar of US money is worth into Japanese money, known as the yen, for example. In this particular case, the quoted rate, the official value of one US dollar (USD) is 102 Japanese yen (JPY). This is the quoted exchange rate between the USD and JPY, and is known as the “spot rate,” the exchange rate right now. Occasionally, the rate may be quoted as a “forward rate,” an exchange rate trading today, but actual payment is delayed until a specified future date.
Numerous factors will affect the exchange rate. For example, when the Eurodollar, or Euro (EUR), was introduced into the economic and financial markets of the world, the exchange rate of the Euro to all other currencies, an entirely new rate had to be determined based on the Eurodollar . The Chinese yuan renminbi (RMB), currently believed to be artificially deflated and largely backed by the USD, will eventually revalue to match its inflated nature, causing further exchange rate rearrangements.
The currency of several nations is called free-floating. This means that its exchange rate against all other currencies varies every day. In some rare cases, it can vary every hour. Several factors can cause a certain currency to fluctuate, including an unstable government, a national disaster, the fluctuating value of a particular country’s goods on the world market, changes in the value of the monetary base, etc.
There are a number of websites on the Internet that allow the user to determine exchange rates between major currency denominations using their own interactive currency calculator. It’s a simple matter of finding a site and, after determining if the site has the particular currencies you want, clicking on a national currency, and then another for the current exchange rate for those chosen currencies. It should be noted that the rates quoted on these exchange websites are generally not the official exchange market rates. These are the rates used by the particular bank or banks with which these sites are affiliated. In general, however, the difference will be negligible.
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