Dollar to Naira Exchange Rates
There has been witnessed a very huge growth in international growth particularly in the current century. There are therefore many people who are engaging in business activities within their countries as well as outside the borders of the countries. Such trade necessitates the use of foreign currency at certain times. An example is in the constant use of both the American dollar and the Nigerian Naira by business men and women who trade between United States and Nigeria. It is this reason that makes business men and women very particular about foreign exchange.
How currencies exchange in the foreign exchange is of great interest to a country and its citizens especially those involved in international trade. This is vital since a small change in rates of foreign exchange could consequently lead to huge financial changes in the market. The ability to precisely predict how foreign exchange markets will fluctuate from time to time is therefore a very important piece of knowledge for business people. The American dollar is usually the main comparing point for most currencies world wide. This is mainly because of the extent over which the dollar is used in international trade.
Let us consider a specific case of how the Nigerian currency compares to the United States Dollar. First of all, the Nigerian Naira is currently exchanging for three hundred and fifteen Naira for one American dollar. This exchange rate is not steady since it keeps changing with time due to different reasons. This leads us to analyze different factors that contribute to the fluctuation of exchange rates from time to time. Several reasons can be put forward to explain why the dollar changes at different rates to different currencies in the world.
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One of the factors that affect exchange rate are inflation. Inflation basically affects the commodity markets which in turn affect the value of currencies. Case in point is when prices of commodities in Nigeria suddenly undergo high fluctuation, this consequently affects how the Naira compares to the dollar. It is for this reason that countries must ensure that there is as little inflation as possible so as to cushion their currencies against fluctuations.
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Interest rates also affect exchange rates of the country’s currency. For instance, if banks within Nigeria alter their interest rates considerably, this would definitely have an effect on how the Naira would exchange to the dollar. To achieve stable exchange rates of the Naira in Nigeria, the government has cushioned citizens against huge interest rates. Government debts and balance of payments are also important factors that dictate how the Naira compares to the dollar. Political stability and market speculation are non economic factors that also affect foreign exchange.