News and Society

How Currency Exchange Rates Effect Global Business

Economics, News and Society
The entire world's economic system depends upon the exchange rate. For this reason, it is very important you learn how it works. How the currency exchange rates effect global business is like a thermometer, it measures the health of global economics. First, you must understand by definition what the exchange rate is. It is the value of one nation's currency in comparison to another or to put it another way, if you took one U.S. dollar to Canada, would you be able to buy more than one item at a Dollar Store or not even one item? The laws of supply and demand dictate how the currency exchange rates effect global business with something called a floating exchange rate. A floating exchange rate means that currency values "float" or fluctuate depending on how much supply is being demanded...