Why do you send more and receive less during international transactions?

Whether you work abroad or make regular international money transfers to your family residing in another nation. You need to know specific facts about foreign exchange rates to get the most out of your overseas money transfers. People often get confused with exchange rates, and so they tend to miscalculate them.

Under the liberalized remittance facility, everybody is allowed to remit freely. So having an exact status of the foreign exchange rates helps to process the international money transfer. Nowadays, the remitting companies have included a separate section on their homepage regarding the foreign exchange rates. Likewise, our product RemitAll Software has all the facilities where your customers can update themselves with the current rates.

Forex trading today

The foreign exchange market, also called the currency exchange market, trades currency pairs globally. According to a recent study, the buyers and sellers are currently trading more than five million dollars every day.

The original demand for Foreign Exchange arose from merchants' requirements for settling their trades. Foreign exchange is the largest and oldest financial market, engaging a diverse range of players. Hence it provides the framework for the rest of the financial trades that exist. The fluctuation in the markets is a given phenomenon; Therefore, the traders must be stay informed on world events.

Changes in the foreign exchange market affect the relative value of all the global currencies. The business is a 24 hour over-the-counter (OTC) and dealers' market. It means the transactions are complete between two participants via telecommunication technology.

Factors shaping Forex market rates

It is essential to know about Forex because it is related to the remittance industry. Many remittance companies display accurate rates, enabling the customers to have a clearer picture of their sending and receivables. Currency values are seldom stagnant. Thus, if you send $100 to your family every month, you will notice that they receive different amounts every time. You may pin this reason on the exchange rate. The amount of one currency you get in return for another is continuously changing.

The forex market is complex, and the forecast hinges on various factors. In a recent study, analysts have discovered several themes and drivers that impact the numbers. The factors include economic growth, political stability, monetary policy, imports and exports, and interest rates.

• Interest rates - Interest rates determine the ROI your money earns in a bank account. Similarly, interest rates influence a country's currency. The higher the rates, the stronger the currency as money floods into that economy in quest of higher returns.

• Geopolitics - Political stability has a direct impact on currency status. You will find that politically stable countries have strong currencies.

• Market conditions - Market Conditions strongly influence currency rates. If the investors are worried about the financial markets' state, they will move their money to stable locations.

• Government intervention - Sometimes, the fluctuations result from government interference in the foreign exchange rate. A country might prefer a weaker currency because the productions are cheaper to countries looking to buy them. For a nation relying on exports, a weaker currency offers a significant advantage globally.

Importance of foreign exchange market rates

The forex market and exchange rates stand fundamental to international trade and investments. The global business would not have existed in various nations in the absence of a proper Forex mechanism. 

The economic outlook for a country is the most determinant value of its national currency. However, there is no fail-safe formula for predicting the foreign exchange market. Many factors contribute to exchange rates determination. Brexit caused a significant value of the GBP, and now it is recovering gradually.

The future

To bring in innovation in the remittance industry, Central Banks globally are delving into the concept of Central-Bank-Digital-Currencies (CBDC). Although experts CBDCs don't expect the CBDCs to replace the FIAT money. However, they anticipate CBDCs to complement and bring more efficiency to the current systems.

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