In U.S.A, what exchange rates of banks do companies apply for payment in international transactions?
Answer:
The International Monetary Committee tries to make exchange rates fit the current market. However, each nation has a committee like the USA Federal Reserve. In China, The Central Bank, which is under the direction of the Peoples Congress, makes the decisions. As everybody knows, the Chinese have fought change verses the USA dollar. They have done this to create more jobs and have a healthier economy.
Exchange rates used to be done by the west, mostly America. But this trend belongs to economies in the Asian region who have low wages and cost of goods sold.
The answer, due to the above, is each nation decides their own exchange rate.
The banks decide their own rates based on the demand for a particular currency at a certain time to settle bills and debts in that country. In most countries the government does not fix the exchange rate but appoints a body (usually the National Bank) to intervene by buying and selling if the currency strays too far from its current upper and lower band of movement. Too much movement of currency generally reflects uncertainty about the economic health of that country.
In international transactions like currency dealing, the bank or credit institution either uses the 'spot rate' for the currency (the exact rate at the moment of settlement) but for business settlement transactions they will probably use an average of the exchange rate over the last seven days. Then they will use that rate throughout that particular day.
Info on exchange rates can be found at stock market or bank trading websites. Also, on satellite TV stations the specialize in business news, like Bloomberg.
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: