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Exchange Rates – Dollar to Naira International trade has grown tremendously in the current century. There are therefore many people who are engaging in business activities within their countries as well as outside the borders of the countries. To achieve such trade, one needs to constantly use different foreign currencies. Case in point is how business men plying their trade between United States of America and Nigeria always need to use the Nigerian Naira and the American dollar. It is this reason that makes business men and women very particular about foreign exchange. Rates of exchange form a very important aspect of consideration not only by governments but as well as business men and women. Small changes in exchange rates could affect trade at a very large extent. The ability to precisely predict how foreign exchange markets will fluctuate from time to time is therefore a very important piece of knowledge for business people. The main focus point when considering foreign exchange conversion is any other currency against the United States Dollar. This is mainly because of the extent over which the dollar is used in international trade. Let us consider a specific case of how the Nigerian currency compares to the United States Dollar. First of all, the Nigerian Naira is currently exchanging for three hundred and fifteen Naira for one American dollar. The rate keeps changing periodically as dictated by different reasons. This therefore leads us to scrutinize the factors that influence conversion rates between different currencies. There are several reasons that affect conversion rates of the dollar to other world currencies.
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Inflation is one of the factors that influence daily exchange rates of different currencies. Commodity prices within the markets are affected by inflation and this in turn affects foreign exchange. An example is how the Naira compares to the dollar when prices of commodities within Nigeria change abruptly and sharply. It is therefore very important for countries to put measures that serve to curb inflation in order to cushion their currencies from sharp fluctuations in the foreign exchange markets.
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It is possible to have interest rates that apply to a country affecting how the currency of the country exchanges to other currencies in the foreign market. For instance, if banks within Nigeria alter their interest rates considerably, this would definitely have an effect on how the Naira would exchange to the dollar. Interest rates within Nigeria have been stabilized considerably to achieve the exchange rate for the dollar to Naira today. Other factors that dictate how currencies compare to others in foreign markets include balance of payments as well as government debts if any. Other non economic factors that dictate this rate include political stability of the country as well as market speculation.