An exchange rate is the rate at which one currency can be exchanged for another. It expresses the value of one country's currency in terms of another country's currency, influencing international trade and investment.
Exchange Rate
Definition
An exchange rate is the rate at which one currency can be exchanged for another. It expresses the value of one country's currency in terms of another country's currency, influencing international trade and investment.
Example
If the exchange rate between the US Dollar and the Euro is 1.10, it means that 1 US Dollar can buy 1.10 Euros, or conversely, 1 Euro costs approximately 0.91 US Dollars.
Key Points
- 1The value of one currency in relation to another.
- 2Determines how much of one currency can be bought with another.
- 3Fluctuates due to economic indicators, interest rates, and trade balances.
- 4Critical for international trade, travel, and investment decisions.
Related Terms
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