How do you proceed in calculating exchange rates between countries and what data do you need?
Exchange rates are simply market prices of foreign currencies. The price can fluxuate on a daily basis. So, are you asking how you would build a model that predicts an exchange rate? whew lottsa luck on that one. Or are you asking where you can get exchange rates? Newpapers with a financial section carry such information. You could also look on the web site of a major bank. They will often provide foreign currencies for their customers.
To calculate exchange rates between countries, you would typically need the following data:
1. Base currency: The currency you are converting from.
2. Target currency: The currency you are converting to.
3. Exchange rate: The rate at which one unit of the base currency can be exchanged for the target currency.
To get exchange rates, you have several options:
1. Financial newspapers: Many newspapers with a financial section publish exchange rates. These rates are often updated daily and can be found in the currency markets section.
2. Financial websites: Several websites, such as XE.com, OANDA, and Bloomberg, provide real-time exchange rates. These websites often offer currency converters that allow you to calculate exchange rates between different currencies.
3. Banks: Major banks usually provide foreign currency exchange services to their customers. They often have exchange rate information on their websites or at their physical branches.
When calculating exchange rates, it's important to note that exchange rates can fluctuate due to various factors such as economic indicators, political events, and market speculation. It is also worth mentioning that building a model to predict exchange rates accurately is extremely challenging due to the complex nature of currency markets.