Excecutive Sumarry about Foreign Exchange Rate By Eddie Yakubovich
The official currency of the European Union (EU), the Euro, was launched in 1999 with coins and banknotes issued in 2002. This World recession effectively killed any growth in FX speculation as disposable income was at a premium. Euro is a floating exchange rate, therefore market demand and supply controls the value of the currency.
Placing a foreign exchange hedge can help to manage this foreign exchange rate risk. At the end of WWI there was a brief period of massive currency speculation. Stock trading is similar to owning part of a company or organization. All other currencies were pegged to the dollar at a certain rate.
The exchange rate refers to the value of the US dollar against the values of currencies of other countries. If the US INFLATION rate is HIGHER, investors are LESS likely to prefer the US even with higher interest rates because of the expectation that the value of the dollar will be ERODED by inflation.