A currency exchange is a business that has the legal right to exchange one currency for another. Currency exchange includes physical money ( cash bills or coins) and or trade of goods & services, also referred to as the foreign exchange market.

As an example from a consumer stand point currency exchange can be beneficial in ways such as travel or relocation. When traveling an exchange of currency in a foreign country is sometimes mandatory upon arrival. This is important because in different countries money is usually calculated in an incompatible form, meaning the cost of goods and services differ and do not equal out to be the same. Also in other situations, your common currency (cash or coins) is not accepted in a foreign country. As an example relocating residency to another country potentially influences one to conduct a currency exchange allowing future purchases, known as international rate spot.

Currency exchange allows exchange between one country and another, mainly through or using buy and sell transactions. This means both parties are risking financial hardships with an unpredictable ending. Modifying currency exchange rates introduces adjustments in the form of percentages which are used to typically confirm accuracy, in trade. Potentially the rise of rate changes could cause an impact on interest, inflation in imported goods, and a global impact concerning undervalued currency flow. Exchange rates also contribute to the level of trade in economic measures, controlling a country’s reputation. Increasing higher currency rates it allows imports to be less expensive, and lowering currency rates drives imports to be more expensive in foreign markets. Furthermore, exchange rates are a comparison of two country currencies attracting foreign capital interest.

In terms of trade, it relates to the balance of payments received and a greater demand for a country's exports. As a result, an increase in revenue, and demand of foreign exchange among trading partners would ideally be fair and rewarding. But by having a weak currency flow, more exports become more expensive decreasing a country’s trade deficit. Overall, currency exchange rates must be at an equal balance in international markets to avoid declining capital investments.

Would a higher exchange rate be expected to worsen a country’s trade balance or improve it?

Do you think political stability influences currency strengths?