The value of a currency is determined by the supply and demand of the currency in that particular country. When a currency of a particular country is high in demand by the traders, tourists travellers, investors and so on the value of the currency automatically increases. Here are some of the factors that have both negative and positive impact in the value of the currency of a particular country.
The weakening of US dollar shows its immediate effect on the costs of foreign goods, as the costs increases rapidly. As there is a huge difference found in the trade deficit due to weaker dollar, the consumers in US are found to import more in comparison to what they export.
The top most country that US gets most of its important is Canada, this what makes the value of the Canadian dollar very essential. Medicines bought from Canada cost you somewhat the same, just as the regular value, along with that the cost of other luxury items imported from Europe also remains the same.
It also helps to increase foreign investments and there are different methods through which the foreign investments can help the US economy and to have a stable value of the currency or US dollar. Over the past few years, it is found that there are several foreigner buyers that have shown interest in the US real estate. Studies by NARs also suggest that every one of the five real estate agents sold a house to a foreign buyer.
Wars do have a major impact on the value of the currency. When there is a terrorist attack in a country, it does increase the chances of war in the country. When a country is in a state of war or shows potential for war the demand for its currency decreases.
This officially caused problems in the financial markets and thus the Federal had to make changes in the interest rates. In the current situation, inflation is not a very big problem. However, concerning the risks of inflation, Federal Reserve might consider lowering the interest rates more than it is actually needed.
Unnecessary expenditure done by the government also affects the economy of the country. If the government keeps spending money in programs which are not necessary but costs a lot of money, does affect the value of the currency. The larger the government grows the more the value of the currency reduces.
Once the value of the US dollar decreases it is likely to fall again and it can last for longer than people can actually expect. It is also found that the interest rate does play an important role in the increase and decrease in the direction of currencies. The weaker US dollar does have a major effect on the country's economy. However, the increase in the exports and foreign investment does help the US to give rise in the economy and thus allowing the value of the US dollar currency to rise again.
The weakening of US dollar shows its immediate effect on the costs of foreign goods, as the costs increases rapidly. As there is a huge difference found in the trade deficit due to weaker dollar, the consumers in US are found to import more in comparison to what they export.
The top most country that US gets most of its important is Canada, this what makes the value of the Canadian dollar very essential. Medicines bought from Canada cost you somewhat the same, just as the regular value, along with that the cost of other luxury items imported from Europe also remains the same.
It also helps to increase foreign investments and there are different methods through which the foreign investments can help the US economy and to have a stable value of the currency or US dollar. Over the past few years, it is found that there are several foreigner buyers that have shown interest in the US real estate. Studies by NARs also suggest that every one of the five real estate agents sold a house to a foreign buyer.
Wars do have a major impact on the value of the currency. When there is a terrorist attack in a country, it does increase the chances of war in the country. When a country is in a state of war or shows potential for war the demand for its currency decreases.
This officially caused problems in the financial markets and thus the Federal had to make changes in the interest rates. In the current situation, inflation is not a very big problem. However, concerning the risks of inflation, Federal Reserve might consider lowering the interest rates more than it is actually needed.
Unnecessary expenditure done by the government also affects the economy of the country. If the government keeps spending money in programs which are not necessary but costs a lot of money, does affect the value of the currency. The larger the government grows the more the value of the currency reduces.
Once the value of the US dollar decreases it is likely to fall again and it can last for longer than people can actually expect. It is also found that the interest rate does play an important role in the increase and decrease in the direction of currencies. The weaker US dollar does have a major effect on the country's economy. However, the increase in the exports and foreign investment does help the US to give rise in the economy and thus allowing the value of the US dollar currency to rise again.
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