When converting from eu to inr I noticed a strange pattern every weekend the price of eu rises 1 rs in value and there are four big spikes can someone tell me what causes that and what each individual spike means? I think it has something to do with market closure but I’m not sure what they mean.
The exchange rate hides a lot of things that are going on under the covers. It’s a lot like the CPI, it’s a single number that is designed to represent something specific and most people do not know what that something is nor how it’s calculated. Not because it’s hidden mind you, but because it’s something fairly technical.
Both the foreign exchange (forex, currency markets) and stock exchanges work pretty much the same way. The markets that we talk about are quite literally markets like Amazon except both the buyers and sellers (rather than just sellers) are listing offers for the thing being traded. Technically anyone can list an offer at any price. I could offer to buy 1 Euro for 1 INR. Whether or not someone will take that offer though is another question. If you want your offer to be accepted, you are likely to list an offer close to the market rate.
So, then the question is how is the market rate determined when the market is nothing but a bunch of buy or sell orders where people can list whatever price they want? When no single person says that the exchange rate is X? Statistics. You can average all the outstanding buy/sell orders. You can average the rate from the last X transactions. Or you can average the completed transactions over a period of time like an hour or a day. When you dive into the details of stock prices beyond the ticker price, you will see all those stats plus more. A lot of people don’t even know what a mean or standard deviation is, so this is pretty meaningless to them.
A lot of things can happen that impact the exchange rate the way you describe it. Market closure more generally refers to when most businesses pause business activities rather than the market itself stopping all transactions, although it can. That will result in a change in the outstanding buy/sell orders and the prices they go at. It would be interesting to do more research into it since I don’t know what is causing what you’re seeing specifically. In theory predictable spikes should get smoothed out because someone somewhere would try to make money off that. Currency arbitrage makes money by smoothing out spikes like that.
At a guess it’s more likely to do with the Indian Rupee than the Euro. Have you checked the USD Vs EUR and USD Vs INR?