Latest news with #exchangeRates
Telegraph
6 days ago
- Business
- Telegraph
What Affects Exchange Rates?
What are exchange rates? Exchange rates reflect how much of one currency you can get in exchange for another. For example, if the GBP/USD rate is 1.28, you'll receive $1.28 for every £1. Rates fluctuate constantly due to market forces and global events. Even small changes can make a big difference — especially if you're transferring a large sum or managing business costs abroad. Why do exchange rates change? Currency markets are notoriously unpredictable. Even when economic conditions appear stable, a sudden event — such as a policy announcement or geopolitical crisis — can shift rates in minutes. For example, as of May 2025, the pound has fluctuated 11% against the US dollar and 6% against the euro. The GBP/USD rate ranged from 1.3444 to 1.2099 — a shift that could affect a €500,000 property purchase by over £41,000 depending on timing.* Key factors that influence exchange rates 1. Economic uncertainty Confidence is a major driver. When the future of an economy looks uncertain — due to recession fears, weak data, or global instability — investors often move their money to 'safe-haven' currencies, reducing demand for weaker ones. 2. Political stability and performance A stable government tends to support a stronger currency. Political risk (such as surprise elections or policy changes) can shake investor confidence. When Donald Trump was elected in 2024, the dollar rose against a number of currencies, only to fall back when uncertainty around tariffs and other policies set in. 3. Inflation Moderate inflation can actually boost a currency if it leads central banks to raise interest rates. However, high or hyperinflation suggests economic weakness and often drives currency value down. 4. Government debt High national debt levels may raise concerns about fiscal sustainability, discouraging investment and putting downward pressure on a country's currency. 5. Interest rates Higher interest rates can attract foreign capital, increasing demand for a currency. For example, demand for the euro went down when the European Central Bank started cutting rates ahead of the Bank of England and the Federal Reserve. 6. Terms of trade (exports vs imports) A positive trade balance (more exports than imports) increases demand for a country's currency, helping it appreciate. A negative balance can have the opposite effect. 7. Central bank policy Actions by central banks (like the Bank of England, Federal Reserve, or ECB) — such as interest rate decisions, stimulus measures, or forward guidance — can move currency markets rapidly. How to manage the effects of currency movements Because it's impossible to predict exactly when and how exchange rates will change, many individuals and businesses look for ways to manage their exposure: Work with a currency specialist Unlike traditional banks, FX specialists like Moneycorp offer: Competitive exchange rates No transfer fees Tools to lock in rates or automate transfers Explore currency transfer services Use FX tools to plan ahead Forward contracts **: Lock in today's rate for a future payment (up to 2 years) Spot contracts: Make a quick exchange using the current market rate Market orders: Set a target rate and automatically exchange if it's reached A foreign exchange specialist can help you use these tools to your advantage, whether you're buying property abroad, paying international suppliers, or managing business payroll. FAQs How do exchange rate fluctuations affect my money? Even small rate changes can have a big impact on international money transfers, business costs, holiday budgets, and the value of foreign income or assets. For example, if you're buying a €500,000 property, a rate swing of 5 cents could cost (or save) over £20,000. Exchange rates can also influence: Imported goods prices (cars, electronics, food) UK companies selling abroad The value of your overseas pension or inheritance How does inflation affect exchange rates? Inflation can both increase or decrease a currency's value. If inflation is controlled and leads to higher interest rates, the currency might strengthen. But if inflation runs too high, it erodes purchasing power and may weaken the currency. What happens when the exchange rate increases? When your home currency strengthens, you can buy more of a foreign currency — which is helpful if you're travelling, importing goods, or transferring money abroad. However, if you're earning in a foreign currency or exporting goods, a stronger domestic currency might reduce the value of income or make exports less competitive. Why are exchange rates different at banks? Banks often apply a markup on the rate you see online and may charge transfer fees on top. FX specialists trade in larger volumes and often offer more competitive rates, tailored tools, and no extra fees. Make your money go further The Telegraph Media Group International Money Transfer Service, provided by Moneycorp, gives you access to competitive exchange rates in 120+ currencies, with zero transfer fees. You can: Open an account online in minutes Track market movements Get guidance from a personal relationship manager Access forward contracts and other FX tools Open an account today and gain peace of mind when making international payments. Related articles Currency exchange rates explained Receiving money from abroad Sending money abroad *Interbank rates sourced from Bloomberg. **Forward contracts may require a deposit Be aware of currency risk. None of the information contained in this article constitutes, nor should be construed as financial advice. TTT Moneycorp Limited (company number 738837) is registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp is a trading name of TTT Moneycorp Limited, which is authorised and regulated by the Financial Conduct Authority for the provision of payment services (firm reference number 308919). Date of approval 21/05/2025.
CNA
22-05-2025
- Business
- CNA
US says it agreed with Japan that dollar-yen reflects fundamentals
BANFF, Alberta : U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato agreed on Wednesday that the dollar-yen exchange rate currently reflects fundamentals, the U.S. Treasury Department said, a rare and explicit statement on the market situation. President Donald Trump's focus on addressing the huge U.S. trade deficit and his past remarks accusing Japan of intentionally maintaining a weak yen have led to market expectations that Tokyo will face pressure to strengthen its currency's value against the dollar to give U.S. manufacturers a competitive advantage. Bessent and Kato "reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals," the Treasury Department said in a statement. They met on the sidelines of the Group of Seven finance ministers gathering in Banff, Canada. In a rather contradictory statement, however, the department also said that, as in their previous meeting in April, they did not discuss foreign exchange levels. Asked about the Treasury's claim that the two agreed exchange rates reflect fundamentals at a subsequent news conference, Kato said that he was not in a position to comment but added that he did not discuss 'exchange-rate levels'. "We agreed that currency rates should be set by markets," he said. The dollar briefly jumped to 144.40 yen after the U.S. statement, but the lack of confirmation from the Japanese side pushed back the greenback below 143.50 yen. Later on Wednesday, Japan's top currency diplomat, Atsushi Mimura, who also attended the bilateral meeting, clarified that Kato and Bessent neither discussed currency targets nor current rates. "Our understanding is that the U.S. side probably meant the agreed basic principles that currency rates should be set by markets and excessive volatility and disorderly movements are not desirable," Mimura told reporters. SQUASHING SPECULATION Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, said the U.S. statement may reflect its wish to avoid a further depreciation of the dollar. "Without the statement, the market would have speculated that the U.S. might have pushed Japan for a stronger yen. I personally believe that Bessent, with his sense as a market player, wanted to squash such expectations," Inadome said. Some Asian currencies including South Korea's and the Taiwan dollar this month saw sharp swings on market speculation about possible U.S. pressure to prop up their currencies in their tariff talks. Japan and the United States have agreed to keep the thorny issue of currency rates separate from direct trade negotiations, setting it aside for talks between their finance ministers. A weak yen has also been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs and weighs on consumption. But the yen has already strengthened about 9 per cent this year, as strong uncertainties stemming from sweeping U.S. tariffs have led investors to buy safe-haven currencies such as the yen. In the news conference, Kato said he did not directly discuss Japan's massive holdings of U.S. Treasuries with Bessent. Earlier in May, Kato surprised markets by saying that Japan could use its $1 trillion-plus Treasuries holdings as a card in trade talks with Washington, but later clarified that his comments did not mean to suggest potential sale.
NHK
22-05-2025
- Business
- NHK
Japan, US finance chiefs reaffirm markets should decide exchange rates
Japan's Finance Minister Kato Katsunobu and US Treasury Secretary Scott Bessent have reaffirmed the principle that exchange rates should be determined by the markets. Kato and Bessent met for about 30 minutes on Wednesday on the sidelines of the conference of Group of Seven finance ministers and central bank chiefs in Banff, Canada. Kato told reporters that he asked Bessent for a review of US tariff measures. Kato said they avoided discussing exchange rate levels and agreed to continue close and constructive talks. At the Group of Seven finance leaders' meeting, Kato said the trade imbalance should be addressed not by tariffs but by boosting domestic demand and cutting the budget deficit. Other countries voiced concerns over how the uncertainty surrounding US tariffs would impact the global economy and financial markets. The finance leaders aim to issue a joint statement when they wrap up their two-day meeting on Friday. It remains to be seen to what extent the G7 can show unity on upholding free trade.
CNA
22-05-2025
- Business
- CNA
US, Japan finance chiefs agree current dollar-yen reflects fundamentals
BANFF, Alberta :U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato agreed on Wednesday that the dollar-yen exchange rate currently reflects fundamentals, the U.S. Treasury Department said, a rare and explicit statement on the market situation. President Donald Trump's focus on addressing the huge U.S. trade deficit and his past remarks accusing Japan of intentionally maintaining a weak yen have led to market expectations that Tokyo will face pressure to strengthen its currency's value against the dollar to give U.S. manufacturers a competitive advantage. "They reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals," the Treasury Department said in a statement. Bessent and Kato met on the sidelines of the Group of Seven finance ministers gathering in Banff, Canada. Asked about the Treasury's claim that the two agreed exchange rates reflect fundamentals at a subsequent news conference, Kato said that he was not in a position to comment but added that he did not discuss 'exchange-rate levels'. "We agreed that currency rates should be set by markets," he said. The Treasury Department also said in the statement that, as in their previous meeting in April, they did not discuss foreign exchange levels. The dollar briefly jumped to 144.40 yen after the U.S. statement, but the lack of clear confirmation from the Japanese side pushed back the greenback below 143.50 yen. Japan and the United States have agreed to keep the thorny issue of currency rates separate from direct trade negotiations, setting it aside for talks between their finance ministers. A weak yen has also been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs and weighs on consumption. But the yen has already strengthened about 9 per cent this year, as strong uncertainties stemming from sweeping U.S. tariffs have led investors to buy safe-haven currencies such as the yen. In the news conference, Kato said he did not directly discuss Japan's massive holdings of U.S. Treasuries with Bessent.
NHK
22-05-2025
- Business
- NHK
Japan, US finance chiefs did not discuss currency levels during talks
Japan's Finance Minister Kato Katsunobu and US Treasury Secretary Scott Bessent apparently did not discuss the issue of currency levels when they met on Wednesday on the sidelines of a gathering of finance leaders from the Group of Seven nations in Canada. The Treasury Department reports the two discussed matters, such as global security and the US-Japan trade issue. The department says Bessent and Kato "reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals." It notes that the two finance chiefs did not talk about foreign exchange levels when they met last month.
