Open AccessForeign Exchange Market and the Asset Approach
Author(s) -
Varsha Agarwal
Publication year - 2021
Publication title -
international journal for research in applied science and engineering technology
Language(s) - English
Resource type - Journals
ISSN - 2321-9653
DOI - 10.22214/ijraset.2021.37956
Subject(s) - currency , liberian dollar , monetary economics , exchange rate , foreign exchange market , international economics , asset (computer security) , foreign exchange , economics , business , goods and services , sterilization (economics) , interest rate parity , us dollar , foreign exchange risk , finance , economy , computer security , computer science
Exchange rates play a central role in international trade because they allow us to compare the prices of goods and services produced in different countries. A consumer deciding which of two American cars to buy must compare their dollar prices. Households and firms use exchange rates to translate foreign prices into domestic cur-rency terms. Once the money prices of domestic goods and imports have been expressed in terms of the same currency, households and firms can compute the relative prices that affect international trade flows. Keywords: Foreign Exchange, Exchange Rate, International Trade, Foreign Currency, FOREX Rate, Assets Approach.