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Currency Converter

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A Currency Converter is a tool or application that calculates and displays the equivalent value of one currency in terms of another. It utilizes real-time exchange rates to facilitate quick and accurate conversion between different currencies.

What is Currency?

Currency is a standardized form of money issued by governments or central banks, used as a medium of exchange for goods and services. It takes the form of banknotes or coins and serves as a unit of account, store of value, and medium of exchange in economies.

Example:

INR - Indian Rupee
The Indian rupee (INR) is the official currency of the Republic of India and is issued by 
the Reserve Bank of India. The rupee is subdivided into 100 paise. The symbol of the Indian rupee is ₹.
USD - US Dollar
The US dollar (USD) is the official currency of the United States of America.
It is the world’s most widely traded currency.

How to Use Currency Converter?

  • Enter Amount: Input the value you want to convert.
  • Select Currencies: Choose the source and target currencies from the dropdowns.
  • View Result: Instantly see the converted amount.

What are Forex and Exchange Rates?

Forex, or foreign exchange, refers to the global marketplace for trading national currencies against one another. It operates as a decentralized network of financial institutions. Forex markets enable participants to buy, sell, and speculate on currency values, impacting international trade and investment.

Exchange rates, determined by market forces, denote the value of one currency in terms of another. They fluctuate based on economic factors, impacting international trade and investment.

What is Forex Quotes?

Forex quotes, also known as currency quotes or foreign exchange rates, represent the price of one currency in terms of another. Displayed in pairs like EUR/USD, they indicate the exchange rate at which one currency can be traded for another. Quotes include a bid (buying price) and an ask (selling price), reflecting market dynamics. In the EUR/USD example, if quoted at 1.20, it means 1 Euro can be exchanged for 1.20 US Dollars. The bid (buying rate) of 1.1980 and ask (selling rate) of 1.2010 show the respective buying and selling prices in the market.

Factors that Influence Exchange Rates Between Currencies

  • Trade Balance:Surpluses boost a currency, as demand increases. Deficits may lead to depreciation due to decreased demand for the currency.
  • Inflation Rates: Lower inflation rates strengthen a currency, preserving its purchasing power.
  • Government Debt: High levels of debt may lead to inflation, devaluing a currency. Lower debt levels can attract foreign investors, strengthening the currency.
  • Speculation: Traders’ perceptions and forecasts influence currency demand, impacting exchange rates.
  • Political Stability: Governments with stable policies and strong institutions enhance investor confidence, positively influencing currency value.
  • Market Interventions: Central banks may buy/sell currencies to stabilize or influence exchange rates, impacting market dynamics.

Last Updated : 24 Jan, 2024
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