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Currency trading exchange rate
Exchange rates in currency trading will vary almost everyday following factors that directly affect a country’s financial strength. These are the economic and political factors. Changes in exchange rates are sometimes mistakenly referred to as inflations which have a slight difference with exchange rate. Inflation only affects the exchange rate of a local currency since this factor lowers down the purchasing power of the currency but not the exchange rate itself since there are other factors to consider in determining exchange rate. These rates are called quotes. The quoted value is known to be direct when the currency’s price is compared directly to US$ 1.00. On the other hand, if one unit of a different currency is compared to the US$, this will be an indirect quote for persons living in the US. Exchange rates may also change due to the demand and supply of the currency. If the demand for another currency is high, then it will cost more local currencies to be exchanged in order to acquire the other. Direct quotes in this situation will fall in favor of the foreign currency or the currency being bought. The opposite happens when the supply is greater than the demand on a certain currency.
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