Currency valuation

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CA Ankush Bansal (Querist)

28 March 2012 can anyone tell me plz hw the currency exchange rates r decided b/w 2 counties?

hw the currenncy exchage r will be decide in case of new country ?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

28 March 2012 Currency Rate is the exchange rate of Other Currency with the home currency. In the instance case the home currency is Indian Rupee. US Dollar, GB Pounds, Euro, Japnese Yen are the few examples of other Foreign Currencies. The rate at which we can purchase or sale these foreign currencies is the currency rate. And it is denominated in Indian Rupees.
e.g. 1 USD = INR 45.50. Here the currency rate is 45.50.

The Foreign Exchange Dealers Association of India better known as FEDAI decides the currency rate of the country.

The Foreign Currency is a tradable commodity. Based on the demand and supply of a particular currency in international market the currency rates are determined.

There are various factors which determine the currency rates. Purchase Power Parity (PPP) is one such important factor which determines currency rate. The purchase power of 1 Re is compared to purchase power of 1unit of Foreign currency for a common commodity/service, this is called PPP. Based on this and other factors inclusive of Political, economical, etc., determine the currency rate.

read:
https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/1_FCP010411.pdf

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CA Ankush Bansal

CA Ankush Bansal (Querist)

28 March 2012 Sir , i could not found link . Plz help .

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

28 March 2012 sir, i have opened this link again anyway another link is:

https://rbidocs.rbi.org.in/rdocs/publicationreport/pdfs/77577.pdf

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CA Ankush Bansal

CA Ankush Bansal (Querist)

28 March 2012 i hav got it sir

Thnx .

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