All you need to know about currency exchange rates

Posted by Shreya Jain on April 25th, 2019

An exchange rate is the value of a nation’s currency versus the currency of a different nation or an economic zone. An exchange rate is the rate at which one currency is exchanged for another. It is also regarded as the value of one country’s currency in relation to another currency. Exchange rates are determined in the foreign exchange market that is open to a wide range of different types of buyers and sellers and where currency trading is done throughout the day, except for the weekends. For instance, if an individual is sending money from Singapore to India, they will have to know the current exchange rate sgd to inr for understanding how the trade is done and what affects the rate so they will be able to do it efficiently. It is always beneficial for understanding in depth about the exchange rate. It is critical to know about the different types of exchange rates before converting one sgd to inr. Some of the types of exchange rates are listed below:

1. Free floating:

A free-floating exchange rate will rise and fall due to the changes in the foreign exchange market.

2. Restricted currencies:

Some countries may have restricted currencies, that may limit their exchange to within the countries’ borders. Also, a restricted currency will have its value that is set by the government.

3. Onshore vs. Offshore:

Exchange rates can also be different for the same country. In some cases, there will be onshore rate and an offshore rate. Generally, a more favorable exchange rate that can often be found within a country’s border versus outside the borders. China is a major example of a country which gas a rate structure, and their currency is controlled by the government.

4. Currency peg:

A lot of times, a country will peg the currency to that of another nation.

5. Spot vs. forward:

Exchange rates can also have what is known as a spot rate or cash value, that is the current market value. An exchange rate may also have a forward value that is based on the expectations for the currency to rise or fall.

An exchange rate is the value of the country’s currency vs. that of another country or economic zone. A lot of the exchange rates are free floating and rise or fall based on the supply and demand in the market. Some of the currencies are not free floating and they also have some restrictions. Making sure an individual chooses the right rate for finding out the exchange rate sgd to inr is important. Each country determining the exchange rate regime that is going to be applied to the currency will determine how the rate will function.

Author bio:

Shreya Jain is a professional banker and been working in foreign exchange department for more than 12 years. In this article, she has explained the currency exchange rate SGD to INR concept