Currency transfer is a wonderful system that lets us send money overseas. We can define foreign currency simply as the currencies of foreign countries.
Exchange rate transactions are realized in two ways: buying and selling rates. The buying rate is the price used when buying foreign currency or cash. This means that when you receive foreign currency in exchange for your currency from foreign exchange offices or banks, it is called real transaction. The selling rate shows the price used in the sale of foreign currency for cash.
Exchange rates are applied in 3 different ways in most countries. These are the Central Bank, banks and private financial institutions, free market rates. It really doesnt matter when it comes to currency transfer comparison, you should be aware of the differences within the exchange rates. The Central Bank intervenes in exchange rates in three ways:
1- Flexible Market Exchange Rate: A system in which the Central Bank allows the rate to fluctuate freely before intervening in the market.
2- Fixed Exchange Rate System: a system the central bank allows the basic currency to not tochange.
3- Controlled Exchange Rate System: The system in which the Central Bank aims to control exchange rate fluctuations.
How Should We Use Currency
When it comes to investment, many people think of buying foreign currency, but if your income is not foreign currency, investing in foreign currency can be risky. If you have a goal to go abroad, study abroad, vacation, spend with foreign currency, you can save the money of that country.
If you do not have foreign currency income, foreign currency debt or spending, you should think carefully before converting your money into foreign currency because there are many factors that affect the course of the currency. Even experts cannot predict best currency transfer services. You should remember that there are many other investment tools and research well.
Instead of keeping the money in a single investment vehicle, you can create a basket according to different maturities or risks. Before deciding to invest, research thoroughly, get information about currency transferand consult an expert.
What are the Exchange Rate Types
Exchange rate types are given below:
Nominal exchange rate: It is the name given to the value of foreign currencies against the national currency. It is a type of currency transfer exchange rate that indicates the equality of 1 US dollar from another unit to a foreign currency.
Real exchange rate: Real exchange rate is obtained by adjusting the nominal exchange rate within the scope of inflation rate. Transferwise currency is a good tool to have if you want to invest in other currencies.
Cross and Effective Exchange Rate
Cross rate: It is the name given to the exchange rate of foreign currencies in terms of another foreign currency. To give an example; When the person wants to buy Euros with the current dollar in his hand, the cross rate is in question. You can easily use any of the currency transfer companies to buy new currencies.
Effective exchange rate: The effective exchange rate is calculated by the average of two foreign exchange rates with each other. Before cross currency transfer, it is necessary to learn the value of the currency. To give an example; If the currency types to be traded are dollars and euros, it is necessary to know how much 1 dollar and 1 euro are.
What Can Have An İmpact On Change Of Exchange Rate
Whether it is Currencyfair vs transfervise, does not change the fact that whichever way you want to keep your currency, exchange rate is more important than the tool you are converting with.The factors that change the exchange rate are as follows:
Balance of Payments: It is the name given to the record of the economic transactions of the country. Imbalances in payments can be eliminated by applying active currency transfer policies. Changes in foreign exchange prices change the balance of supply and demand. Differences in supply and demand also affect creditors and debtors.
Income Level and Interes Rates
Income level: When the country’s average income is higher than other countries; For each exchange rate, there is an increase in the country’s imports. While the supply remains unchanged, the exchange rate rises, causing the country’s currency to depreciate. Interest in imported goods will increase, as the demands and tastes of people with increasing income will begin to differ. This, in turn, not only changes the equilibrium rate, but also causes an increase in the demand for currency transfer.
Changes in the general price level: High inflation in the country causes the products produced by the country to be more expensive than abroad. Therefore, the demand for imported goods increases and the country’s currency depreciates. You can use transferwise currency converter to change you currency when general prices change. You can save your invesment with a safer currency.
Interest rates: When the real interest rate falls, the country’s currency depreciates and when the real interest rate rises, the currency appreciates.
Capital movements: One of the most important factors of the change in the exchange rate in the short term is capital movements.