Understanding the Return on Exchange Rate Formula Explained

Learn how to calculate the return on exchange rate with a simple formula. Track currency value changes easily.

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The formula for return on the exchange rate is calculated as: ((New Exchange Rate - Old Exchange Rate) / Old Exchange Rate) * 100. This helps you determine the percentage change in currency value over a specified period, making it easier to track financial gains or losses.

FAQs & Answers

  1. How is the return on exchange rate useful? It helps investors and traders assess the performance of a currency over time and make informed financial decisions.
  2. What factors affect exchange rates? Factors include interest rates, inflation, political stability, and economic performance.
  3. Can you give an example of exchange rate calculation? If the old exchange rate was 100 and the new rate is 110, the return on exchange rate would be ((110 - 100) / 100) * 100 = 10%.