DiscussionsCategory: EconomicsHow are currency exchange rates determined?
Cliff ImasuenClassHall Instructor Staff asked 6 years ago

This question has baffled me since my secondary school days.

I know that there was a time in Nigeria’s history when the naira was equal in value to the dollar. However, today, the value of the naira continues to depreciate against the dollar and other hard currencies. The effect of this trend cannot be overlooked, as it determines the prices of many consumer goods like electronics, cars, computers, phones, most of which are imported from other countries and paid for in dollars.

The exchange rate of the naira against the dollar fluctuates frequently, sometimes in favour of the naira and other times not so in its favour.

I have wondered for a long time what forces are behind the fluctuations, and if there are people who determine the value, perhaps through international monetary policies of some sort.

3 Answers
Toyyib IbrahimToyyib Ibrahim answered 4 years ago

Currency rate are determined two main way which are
1.floating rate
2.fixed rate

Sadiq BarauSadiq Barau answered 4 years ago
Currency prices can be determined in two main ways: a floating rate or a fixed rate. A floating rate is determined by the open market through supply and demand on globalcurrency markets. ... 5 Therefore, mostexchange rates are not set but aredetermined by on-going trading activity in the world's currency markets.
Maryam Abduljamih FolorunshoMaryam answered 4 years ago

Floating rate and fixed rate

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