FOREIGN EXCHANGE RATES

The exchange of foreign currency or foreign currency exchange rate indicates the price or value of the currency the country stated in other currencies. Foreign currency exchange rate can also be defined as the number of domestic needs, namely the number of rupiah needed to obtain one unit of foreign currency. Kkurs that indicates that the same U.S. $ 1.00 to Rp. 11200 means to obtain one United States dollar union needed 11,200 Indonesian rupiah. currency exchange rate between the two countries often at a different time with the other. Basically there are two ways of determining the exchange rate of foreign currency:
• Based on the demand and supply of foreign currency in the free market.
• defined by the government

KURS DETERMINATION IN THE FREE MARKET
For the largest population of a country requires foreign currency is to be able to trade overseas activities with other parts of the world population. Sometimes people of a country like to buy more products from outside the country, this is from overseas goods cheaper when compared with that in the production of goods in Indonesia.

Demand for Foreign Currency
The exchange of foreign currency exchange adalh a very important factor in determining whether the goods in other countries "cheaper" or "more expensive" of goods produced in the country. Demand for foreign exchange was dependent country with a value tukarnya, if the normal value of a currency exchange rate is down, then people will "buy" foreign currency, the value at the time tukarnya up so the people will soon sell foreign currency supply them.

Determine KURS BY THE GOVERNMENT OF
Government may intervene in determining the exchange rate of foreign currency. The aim is to ensure that the exchange does not exist will cause a bad effect on the economy. Exchange rate of exchange set by different government exchange rate is determined by the free market. The extent to which differences tersbut depend on government policies and decisions regarding the most appropriate exchange rate for purposes Iron-clad government to stabilize and develop the economy