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Exchange rates and bank fees : We tell you all !

Banking world • 16 April 2024

The exchange rate is the value of one currency or currency compared to another. It is the price of one currency in relation to another, also known as parity (€/FCFA, $/FCFA, etc.)

When shopping online, it is important to take the exchange rate into account. That’s why, at PaySika, not only are you entitled to currencies with an international reach, but also to a bank card that offers a very affordable exchange rate.

1.     What are the factors that influence the exchange rate?

There are a number of factors that cause the exchange rate to be set.

1.1. Supply and demand

If there are a lot of currencies in circulation and demand is medium or low, the exchange rate is usually low.

If, on the other hand, there is less money in circulation and demand is high, the exchange rate rises.

1.2. Consumer confidence

When people in a country are confident about the stability of their economy, investment and consumer spending tend to be higher.

This factor therefore makes the currency more attractive to investors, resulting in a higher exchange rate.

1.3. The balance of trade 

A  country’s trade balance refers to the value of exports relative to the value of imports. If this balance is not equal, it will affect the exchange rate.

If exports are greater than imports, the country sends more of its foreign exchange abroad. And the higher the supply of foreign exchange, the lower the demand and exchange rate.

1.4. Inflation

Inflation is the rate at which the prices of goods and services rise over time in an economy. When a country has a  low and constant inflation rate, its currency is usually more valuable, resulting in a higher exchange rate.

1.5. Interest rates

Interest is the fee that banks charge consumers when they borrow money. The higher the interest rate, the higher the fees.

1.6. Political unrest

Political upheaval is a factor of instability. This source can lead to several consequences: reduction in demand for the country’s currency, decrease in value, discouragement of foreign exchange traders.

1.7. The country’s debt

If a country is indebted, its currency is undoubtedly seen as a riskier option by foreign investors. This can lead to a drop in the value of the country’s currency and a drop in the exchange rate.

2.     Who sets the exchange rate?

The Forex (Foreign Exchange market) or the foreign exchange market is the center of all operations. It is the market in which all convertible currencies are exchanged at exchange rates.

When we talk about exchange, we are really talking about buying and selling, since this market is governed by the law of supply and demand. The exchange rate can be either fixed or floating.  It is fixed when it is fixed by decision of the State. The more a currency is demanded in international transactions, the more its value increases; The chance rate in this case is therefore floating.

3.     Where can I get the best exchange rate for my online payments?

It should be noted that it is up to each country to decide on its exchange rate system. For your online purchases in Cameroon and outside Cameroon, opt for services that offer you a competitive exchange rate.

With your PaySika banking app in this case, everything is simplified and less expensive. The XAF bank card that PaySika offers you is valid for 03 years, and you have the privilege of making online purchases on several of your merchant platforms.

Careful!!! With the exchange rate, you may find yourself paying double the price for an item. What for? Either because the exchange rate is actually very high, or because the bank you use to make the purchase has overcharged you.

Note: PaySika is not responsible for any overcharges or additional taxes imposed. The fact is that the exchange rate of the dollar (€) or the euro ($) fluctuates from day to day, we only apply the imposed rates.

So a pretty simple recommendation: trust PaySika, one of the best banking apps in French-speaking Africa.

You can now shop online with peace of mind thanks to your PayIka banking app

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