when comes to euro to dollar USD . the euro is a more powerful currency than the dollar. nowadays, the euro to the USD exchange rate is 1.11$. which means, if you buy anything anywhere using European currency. you can purchase more than 11 cents in United States dollar value.
These currency rates are not steady, and straight all the time. it will change every minute, in the currency forex market. which is traded by traders. however, if any big fluctuation happens in any particular currency. then it has a big impact and changes the economy.
These currency rates are determined by three things; which interest rate of the central bank, the country’s debt, and GDP the gross domestic product of the economy.
how exchange rate works
the exchange rate is shown by the forex market. these days lot of traders, trading in the forex currency market. which is traded consistently and changes the price of the value. forex trades all the currency globally, anyone can speculate through the market. and earn a lot of money.
euro to dollar USD; interest rate
if the central bank of Europe increases the interest rate, then I don’t think the market also increases. which means when the interest rate increases, a lot of businesses and nonprofit organizations find it very hard to pay the loan. with high-interest rates.
moreover, it does not only affect the big industry. were affected; all the individuals in all types of car loans, personal loans, business loans, etc… country, feels more hard to repay the amounts.
furthermore, a lot of investors start to lose money in the market and they can’t able to hold the price at the same level. on the other hand, many of the brokers, and fund managers. didn’t able to invest the money.
this happens in a lot of countries, but in Europe, it happens often. when comparing all other countries. the currency exchange doesn’t change continuously. it changes little by little. but you can see the dramatic decrease in the total currency of the economy.
the time who trade in the forex market, they always end up with a great loss. because the market starts to drop suddenly. it has volatility when comparing all the normal markets. so now you will understand. how the exchange rate increases and decreases in the real world.
country debt
country debt is single government debt. which this debt has two types. one is who buys the bonds from the government; this includes own citizens, worldwide investors, and the international government.
if the federal government owes more than the limit of its standard spending. then which leads to high impact and changes in the currency.
for the reason if the central government increases the tax rate and lowers their spending when the nation is in high debt, then it also slows down economic growth. were the currency made a big change in the exchange rate.
GDP economic rate
the gross domestic product is determined by four things things personal consumption, business investment, government spending, and net trades. personal consumption is the expenditure of every individual in the country such as food, travel, etc..
then business investment, when most of the organization has a high amount of debt, which leads to economic decline in their own country. so instead business investment always benefits the gross domestic product.
on the other hand government spending and net trades are very important for currency stability. which are spending are employee salary, military weapons expenses,s, etc… net trades are export and import when Europe has a high standard of export.
they always be profitable in trades of euro to dollar USD when comparing imports because imports make other’s country’s more profitable. so GDP growth increases always currency like euro to dollar USD. if you have any more doubts feel free to contact us.