All About Exchange Rate (27.3)
Chapter 27 - Business and the International Economy
Learning Objectives: To understand the impact of exchange rate fluctuations in businesses
Do you know what is the exchange rate?
Simply put, the exchange rate is how much one country's currency is worth it of another country's currency.
Let's try to understand with an example (September 10, 2026):
₮ 1 is the equivalent of USD 0.00027803
- In other words, ₮ 1 is worth it a lot less than USD 1
USD 1 is the equivalent of ₮ 3,596.6113
- In other words, with USD 1 you can buy nearly 3 thousand Tugrik!
But how and why does the exchange rate fluctuate (go up and down)?
Demand and Supply For The Currency:
- When the demand for a currency is high - the price for that currency will raise:
A currency demand varies according to:
- The interest from investors to invest in the country;
- Interest from other countries in importing products from that country.
A highly demanded currency appreciates;
A currency with low demand depreciates.
How does the Exchange Rate impact businesses? It depends on whether your business is an exporter or an importer:
To-Do List:
Chapter 27 - Business and the International Economy
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