AUD (Australian dollar) to USD (United States dollar) conversion rate can be defined as the ratio at which the Australian dollar can be exchanged for the United States dollar. The AUD to USD conversion rate of 3.21 means that an Australian dollar can be converted to 3.21 United States dollar. A high conversion between two distinct currencies indicates that one currency can be used to purchase more units of the other currency as seen in the AUD to USD. This means that if one USD is converted into more than one AUD, then the Australian dollar has a lower value relative to the United States dollar.
AUD to USD conversion rates is said to be the exchange of a currency (Australian dollar) into another type of currency (United States dollar) at a predetermined price and at a predetermined date. This conversion rate is a financial derivative instrument that is valued distinctly from the underlying security.
FACTORS THAT INFLUENCE THE AUD TO USD CONVERSION RATE
The AUD to USD conversion rate depends on various factors such as the interest rate generated by currency’s issuing central banks (Australian dollar central bank) in relative to the interest rate set by the bank of the currency being converted to (bank of United States dollar). Countries which have high real interest rates have the capacity to attract more investors and forex traders from other countries thereby having an increase in demand and a higher value will be attributed to that currency.
Another influential factor is the country’s term of trades. A country’s term of trade is said to be the ratio that compares export prices to import prices. If the export price of a country rises to a greater length than that of the country’s imports, it shows a favorable improvement. An increase in a county’s terms of trade shows a high demand of the nation’s exports which means rising revenue from exports and an increase in demand of that country’s currency.
Economic and political stability is another factor. Foreign investors always seek out to invest their capital in nations with strong economic performance. These set of nations or countries tend to draw investment funds completely away from other nations with political and economic risk. Political instability leads to loss of confidence and this fails to attract investors.
DETERMINATION OF THE AUD TO USD CONVERSION RATE USING A CURRENCY CONVERTER
In other to convert one Australian dollar into a United States dollar, a currency converter user enters an amount of money e.g. 20000 AUD and chooses the preferred currency he wishes to check the monetary value of e.g. USD. After inputting these figures, the user selects one or several other currency he would like to see the result display in. The currency converter which is an application software then calculates and displays the correct amount of the money and its conversion rate.
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