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Dollar to Naira Exchange Rates There has been witnessed a very huge growth in international growth particularly in the current century. This means that there are very many people who are conducting trade beyond their country’s borders. For such business to be successful, it is important for business men and women to invest in different currencies from time to time. 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. This is what makes foreign exchange very important particularly to business men and women. Rates of exchange form a very important aspect of consideration not only by governments but as well as business men and women. This is vital since a small change in rates of foreign exchange could consequently lead to huge financial changes in the market. 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 American dollar is usually the main comparing point for most currencies world wide. 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. This exchange rate is however not fixed since it fluctuates from time to time. This leads us to analyze different factors that contribute to the fluctuation of exchange rates from time to time. It is important to note that different currencies convert at different rates to the dollar at different times because of several reasons.
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Inflation is a key factor that dictates how currencies exchange in the foreign exchange market. Inflation basically affects the commodity markets which in turn affect the value of currencies. Case in point is when prices of commodities in Nigeria suddenly undergo high fluctuation, this consequently affects how the Naira compares to the dollar. This is why countries must put up measures that protect their currencies from fluctuation as occasioned by inflation.
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Interest rates also affect exchange rates of the country’s currency. Case in point is when banks that operate within Nigeria decide to raise interest rates which consequently has an effect on how the Naira exchanges to the dollar. The government of Nigeria has ensured that interest rates are moderated to protect the Naira against fluctuations in foreign exchange markets. Balance of payments and government debts do also dictate how a country’s currency will compare to other currencies in the foreign market. Political stability and market speculation are non economic factors that also affect foreign exchange.