Currency Converter

The rate or exchange rate between two currencies is the rate or proportion ratio between the value of one and the other. This rate is an indicator that expresses how many units of one currency needed to obtain one unit of the other. For example, if the exchange rate between the euro and the US dollar (EUR / USD) out of 1.4, this means that the euro equivalent of $ 1.4. Similarly, if the rate is calculated in reverse (USD / EUR), this results in a rate of 0.71, which means that the dollar is equivalent to 0.71 euros. The birth of a system of exchange rates comes from the existence of international trade between countries with different currencies. If, for example, a Mexican company sells products to a Spanish company wants to charge in pesos, so the Spanish company must buy Mexican pesos and use them to pay the Mexican manufacturer. People and companies, who want to buy foreign currencies, should go to the forex market. In this market, the price for each of the currencies expressed in national currency is determined. At this price, is called the exchange rate. The determination of the exchange rate is through the currency market. The exchange rate as the price of a currency is established, as in any other market by the meeting of supply and demand of foreign exchange. If we analyze, for example, a hypothetical situation in which there are only two currencies the euro and the dollar.