Exchange rates are constantly changing according to the global demand and supply of currencies across the globe.

An exchange rate refers to the rate at which a unit of domestic currency is exchanged for a given amount of a foreign currency (Riley 2011).

It is both a measure of relative value or purchasing power or an asset price. The exchange of these foreign transactions take place in both spot and forward markets.

They impact the determination of the interest rate which has flow on effects to many areas of both the domestic and international markets.

On the first Tuesday of every month, the board of the RBA meet to determine the interest rate. They met yesterday and determined to leave it on hold.

Below are some useful articles on exchange rates and interest rates:

http://www.abc.net.au/news/2014-04-01/reserve-bank-leaves-interest-rates-on-hold-in-april/5359248?section=business

http://www.smh.com.au/business/the-economy/australian-dollar-jumps-as-rba-keeps-official-cash-rate-on-hold-20140401-35vo9.html

http://www.theaustralian.com.au/business/latest/low-interest-rates-not-enough-to-drive-growth-rba/story-e6frg90f-1226865368085

Aussie Dollar on the rise again? 

HSC Economics update

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