vaihtosuhdin

Vaihtosuhde, often translated as exchange rate, is the value of one country's currency for the purpose of trade with another country's currency. It determines how much of one currency is needed to purchase a unit of another currency. Exchange rates are crucial for international trade, investment, and tourism. They can fluctuate constantly due to various economic and political factors.

There are two main types of exchange rate regimes: fixed and floating. In a fixed exchange rate system, a country's government or central bank ties its currency's value to another currency or a basket of currencies. This provides stability but can limit a country's monetary policy flexibility. In a floating exchange rate system, the currency's value is determined by market forces of supply and demand. This allows for greater monetary policy independence but can lead to greater volatility.

Factors influencing exchange rates include interest rates, inflation rates, political stability, economic performance, and speculation. For example, higher interest rates in a country can attract foreign capital, increasing demand for its currency and thus its exchange rate. Conversely, high inflation can erode a currency's purchasing power, leading to a depreciation in its exchange rate. Businesses and individuals involved in international transactions must monitor exchange rates to manage risks and make informed decisions.