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4 Forex Rates

The Forex rate or foreign-exchange rate exists between two currencies and the rate refers to the trade currency rate changes relatively to other currencies and to the disparities between two specific world currencies as far as how much each is worth.

When it comes to the trading of paper world currency online the Forex rate is very important since the entire Forex trade revolves around exchange rates. This exchange rate is also how Forex investors make their money, looking at when currencies rise and fall due to a many global, economic, and political conditions. Many Forex traders worldwide make and lose fortunes on the slightest changes. They seek to be able to predict these movements, invest in the right currency and make some money.

1. Pips

Pips stands for percentage in points and is a measurement of the increase in the value of currency rates which can achieve either positive or negative values. The more positive pips a Forex investor makes, the more money can be made.

2. Forex Exchange Rates

Forex exchange rates allow Forex traders to know just when to open a position and when to close it. It is important to know the price of the currency for buying and selling, and to be able to have constant free online access to accurate real time rates in currency trading. The foreign exchange market or the fx market helps to facilitate international trade and investment. It is involved in all kinds of foreign currencies like the Canadian Dollar, American Dollar, Mexican Peso, Singapore Dollar, South African Rand, New Zealand Dollar, Hong Kong Dollar, Israeli New Shekel, South Korean Won and many more. It does this by making it possible for businesses to convert one currency to another currency. For example, it permits a US business to import goods from India, and pay in the Indian Rupee, even though the business’s income is in US dollars or USD. It also supports speculation, and facilitates trade, and serves as a currency converter.

3. Current or Spot Exchange Rate

In addition to the Forex exchange rate, there is also the current exchange rate, also known as the spot exchange rate, for foreign exchange contract for immediate delivery. Spot exchange rate or the ‘benchmark rates‘, ‘straightforward rates’ or ‘outright rates‘, the spot rate is the price that a buyer expects to pay for a foreign currency in another currency.

4. Forward Exchange Rate

The Forward Exchange Rate is quoted and trading on the current day in what is refered to as a ‘forward contract’ to exchange the currency in the future, then delivered and paid for at a specific date in the future agreed upon by the two Forex investors. The existence of the foreign exchange market invariably leads to a considerable speculation.

Central banks may try to deal with this speculation by adjusting the rate of interest. An investor can then buy a currency if the return (the interest) is high enough. The higher a particular nation’s interest rates, the more demand for that currency.

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