How the value of currency changes everyday?

  • Thread starter thomate1
  • Start date
  • Tags
    Value
In summary, the conversation discusses the relationship between currency values and economic factors such as demand and supply. The speaker is curious about how the value of currency changes and what influences it. They also ask about the Sensex, which is an index of 30 major stocks on the Bombay Stock Exchange. The conversation briefly mentions the NY Mercantile Exchange and its role in currency exchanges.
  • #1
thomate1
1,346
0
Hi friends,
I am a physics student. But I am very much intersted in Economics. But I really don't know how the value of currency changes everyday? :confused: One more thing: Everyday I read in newspapers that Sensex incresed by a particular value or something similar. SO what actually is sensex and how it varies?

Can you help me? :cry:
 
Physics news on Phys.org
  • #2
If want a long explanation:
http://www2.sjsu.edu/faculty/watkins/exchange.htm

Briefly, the exchange is, in part, determined by the demande of the currency from foreign investor and the supply. The demand is partly drived by interest rate. For example, the interest rate in Canada has been higher for the last two years. This brings US investors (those interested bonds and other similar investment) in Canada and therefore increase the demand for Canadian money and increasing the supply of US money. So the end results is a rise of the Canadian dollar from 0.60 US $ to 0.80 US $.
 
  • #3
Sensex is name for the Bombay Stock Exchange Sensitive Index - an index composed of 30 of the largest traded stocks on the Bombay Stock Exchange
 
  • #4
hypatia said:
Sensex is name for the Bombay Stock Exchange Sensitive Index - an index composed of 30 of the largest traded stocks on the Bombay Stock Exchange

Sounds like the dow jones which doesn't have a whole lot to do with currency. Isnt the main currency exchange in the US the NY mercantile exchange?
 
  • #5
NY Mercantile Exchange also deals in futures, things other then money. Perhaps in India its a all in one deal?
 
  • #6
i think there is a derivative market too in India at various brokers
 
  • #7
hypatia said:
NY Mercantile Exchange also deals in futures, things other then money. Perhaps in India its a all in one deal?

Oh so they do deal in currency... are they the major exchange for currency or do we have a larger one?
 

1. What factors influence the value of a currency?

The value of a currency is influenced by a variety of factors, including supply and demand, inflation rates, economic stability and performance, interest rates, and political stability. Changes in any of these factors can cause the value of a currency to fluctuate.

2. How do changes in interest rates affect the value of a currency?

Changes in interest rates can have a significant impact on the value of a currency. When interest rates rise, investors are more likely to invest in that currency, leading to an increase in demand and a rise in value. Conversely, when interest rates decrease, investors may choose to invest in other currencies, leading to a decrease in demand and a decline in value.

3. How does economic stability affect the value of a currency?

Economic stability is a crucial factor in determining the value of a currency. A country that has a stable and growing economy is likely to attract foreign investors, leading to an increase in demand for its currency and an increase in value. On the other hand, a country with an unstable or declining economy may see a decrease in demand for its currency and a decline in value.

4. Can government policies affect the value of a currency?

Yes, government policies can have a significant impact on the value of a currency. For example, the implementation of trade tariffs or restrictions can affect a country's trade balance and ultimately impact its currency value. Additionally, government interventions in the foreign exchange market can also influence the value of a currency.

5. How does speculation impact the value of a currency?

Speculation, or the act of buying and selling currencies in the hope of making a profit, can also impact the value of a currency. When there is a high level of speculation, it can lead to volatility in the exchange rate, causing the value of a currency to change rapidly. This can be particularly true for smaller or emerging market currencies, which are more susceptible to speculation.

Similar threads

Replies
1
Views
635
  • STEM Educators and Teaching
2
Replies
66
Views
12K
  • Precalculus Mathematics Homework Help
Replies
9
Views
983
  • General Math
Replies
1
Views
2K
  • Set Theory, Logic, Probability, Statistics
Replies
5
Views
1K
  • Advanced Physics Homework Help
Replies
14
Views
737
  • General Discussion
Replies
12
Views
907
  • General Discussion
Replies
6
Views
3K
Replies
21
Views
6K
  • General Discussion
Replies
1
Views
881
Back
Top