Want exchange rate for SGD to INR?Here are 4 factor that influence exchange rate

Posted by gauri mishra on May 24th, 2019

Apart from factors such as interest rates and inflation, the currency exchange rate is one of the detrimental elements of the country’s economic condition. Exchange rates play a crucial role in the country’s trade level, which is essential for almost every free market economy in the world. Precisely why exchange rates are closely observed, analysed, and a Governmentally manipulated economic measure.

How does the exchange rate impact a nation?

But if you want exchange rate SGD to INR, you have to remember the some influencers that could move the rates up and down. Before understanding how these factors impact exchange rates, it is imperative to know how it affects the nation. A high-valued currency makes the country’s import inexpensive and its exports expensive in another overseas market. If the currency is of low value, the imports increase, and exports become less expensive. A higher exchange rate can worsen a country’s trading business while lower exchange rates improve them.

Before understanding the rate of one SGD to INR, consider these influential factors:

1)      The difference in inflation: A country with consistently lower inflation rate shows rising currency value as its purchasing power increases in comparison to other nations. Those countries with high inflation exhibit depreciation in their currency in comparison to currencies of their trading countries. This usually includes higher interest rates as well.

2)      The difference in interest rates: Inflation, interest rates, and exchange rates are interrelated. Manipulation in interest rates means central banks exert impact on inflation and exchange rates. Change in interest rates also influences inflation and currency rates. High-interest rates offer higher returns to the lenders as compared to other countries. Therefore, high-interest rates attract more foreign capital and lead to a rise in exchange rates.

3)      Current account deficits: Current account means the trade balance between a country and its trading partners. It reflects all the payments incurred owing to goods, services, interest, and dividends. If the current account reflects a deficit, it means the country is spending more on foreign trade than its earnings. This leads to borrowing capital from external sources. To keep it simple, the country needs more foreign currency than it receives through export sales. It should also supply more of its currency than international tourists demand its products. The demand for foreign currency has the potential to lower the country’s exchange rate only until the domestic goods and services are cheaply available to foreigners.

4)      Political stability and economic conditions: For exchange rate SGD to INR, the financial status of the country should be stable enough. Only then the investment will be worthwhile. Countries that carry such positive attributes can draw investment funds away from those countries who carry more political and economic risk. In the case of political turmoil, the currency weakens and capital moves to the currencies of more stable countries.

Exchange rates can inflict further damages to interest rates, inflation, and even capital gains through domestic securities. Before checking the price for one SGD to INR or even exchanging them, consider the above factors.

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gauri mishra

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gauri mishra
Joined: April 25th, 2019
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