AUD USD rate can be defined as the conversion rate of one currency (Australian dollar) into another currency (United States dollar). The AUD USD rate is said to be the value of the Australian dollar relative to the United States dollar. This means that a forex trader have the capability to trade the Australian dollar for a specific number of the United States dollar.
The AUD USD rate gave great fluctuation abilities due to the fact that the AUD USD currency pairs are actively traded. This feature thrusts the price of currencies up and down. The forex price of the AUD/USD which is how many Australian dollar is needed to by a United States dollar is totally different form the rate a forex trader will receive from the bank when the currencies are being exchanged.
HOW TO READ AND CALCULATE THE AUD USD RATE
In forex trading, if the value of USD/AUD conversion rate is 1.0950, this actually indicates that it will cost 1.0950 Australian dollar for 1 United States dollar. The first currency in the currency pair (USD) always stands for one unit of that particular currency where the forex rate indicates how much of the second currency which is the AUD is required to buy that one unit of the first currency i.e. the USD.
This rate actually tells a forex trader how much it cost to buy one United States dollar using an Australian dollar. The underlying formula can be used to determine how much it cost to buy one United States dollar using an Australian dollar:
In a case of 1/1.0950=0.9132. This only means that it will cost 0.9132 Australian dollar to purchase one United States dollar. This particular price value will be reflected in the AUD/USD currency pair and used for currency conversion.
TYPES OF AUD USD RATE
FIXED AUD USD FOREX RATES
This can be defined as a situation when a country’s currency doesn’t undergo fluctuation, variations, floatation and changes according to the foreign exchange market. In this case, the country makes sure that its currency value against the United States dollar and other essential currencies does not change but remains the same. In other to attain this point, the country (Australia) in question purchases and sells large quantity of its currency (AUD) together with other currencies (USD) to uphold a fixed value.
FLEXIBLE AUD USD FOREX RATE
Here, theAUD USD rate is determined by the forex market. Because of this fact, there is a lot of fluctuation and changes in the AUD USD currency pair at daily basis. The flexible AUD USD rate are moved by whet the forex traders decides that the currency value is worth.
In conclusion, the AUD USD rate is always dependent on various trading factors like the central bank interest rates, the country’s economic stability level, the country’s debt level and their demand and supply levels. Forex traders should put at these factors into consideration before venturing into currency conversion.
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