1

Usually I withdraw money from my account in my home country's currency, to where I live, so the conversion rate is applied and I get the money in the currency of the country I live in. I am very active on exchange rates, what puzzles me is: how can the exchange rates go up and down? I read it can be many factors such as the ones listed here, but what I really want to know, which country do these things affect? There is a timezone difference of 5 hours between where I live and my home country, so in morning, when I saw the rate around 6am it was pretty low, but few hours later it soared up.

How can I figure out whose country or currency has the most impact with exchange rates going up and down in matter of hours or even minutes, as I want to take convert currency when the exchange rate is low (GB Sterling)

Michael
  • 10,238
  • 4
  • 26
  • 56
localhost
  • 595
  • 4
  • 10

1 Answers1

2

The exchange rate between two currencies is simply the price that the most recent market participants were able to agree on, when trading. ie: if the USDCAD is 1.36, it's because the last trade that happened where someone bought 1 USD cost 1.36 CAD. There is no one person/organization which 'decides' the rate between two currencies. The rate moves you see is just the reality of money changing hands as people in various situations trade currencies for various reasons.

Just like with stocks or any other market product, foreign exchange rates can fluctuate wildly based on many things. It is very difficult to forecast where rates will go, because the biggest changes in rates can often be unpredictable news events. For example, when Brexit happened, the value of the GBP plummeted relative to other currencies, because the market traders had less faith in the UK economy, and therefore weren't willing to pay as much to buy GBP. See more here: https://money.stackexchange.com/a/76482/44232.

There is a very high level of risk in the foreign exchange market; for your sake, don't get involved in any trading that you do not well understand, first.

Grade 'Eh' Bacon
  • 43,067
  • 11
  • 111
  • 164