"In finance, an exchange rate is the rate at which one currency will be exchanged for another currency."
The rates at which one country's currency can be exchanged for another country's currency.
Foreign exchange market: The market where currencies of different countries are bought and sold.
Exchange rate regimes: The various systems governments use to manage their exchange rates, such as fixed exchange rate, floating exchange rate, and managed float.
Balance of payments: A country's record of all economic transactions with the rest of the world over a given period of time.
Monetary policy: The process by which a country's central bank uses various tools to control the supply and demand of money to influence inflation, interest rates, and exchange rates.
Interest rates: The cost of borrowing or the return on investment that an investor can expect.
Inflation: The rate at which the general level of prices for goods and services is increasing over time.
Purchasing power parity: The concept that a unit of currency should have the same purchasing power in different countries.
Forward rates: The rate at which one currency can be exchanged for another at a future date.
Speculation: The practice of making risky investments in the hope of making a profit.
International trade: The exchange of goods and services between countries.
International capital flows: The movement of funds between different nations for the purpose of investment or trade.
International finance: The financial transactions that occur between countries.
International monetary system: The system of exchange rates and international currencies that governs financial transactions between countries.
Currency crises: A situation in which a currency loses value rapidly and investors rush to sell their holdings.
Exchange rate forecasting: The practice of making predictions about future exchange rates based on current economic indicators.
Exchange rate determination: The factors that influence the value of a currency relative to other currencies.
Currency risk management: The process of minimizing the potential impact of currency fluctuations on investments or business operations.
Currency hedging: The practice of using financial instruments to reduce the risk of currency fluctuations.
Arbitrage: The practice of exploiting price differences between two or more markets to make a profit.
International financial institutions: Organizations such as the International Monetary Fund and the World Bank that play a role in regulating international finance and promoting economic stability.
Spot exchange rate: The spot exchange rate is the current exchange rate for immediate delivery of currencies in the spot market.
Forward exchange rate: A forward exchange rate is a rate quoted today for settlement at a later date. It represents the expected future value of a currency.
Fixed exchange rate: A fixed exchange rate is a rate that is fixed by a government against a particular foreign currency or basket of currencies. It remains constant until the authorities change it.
Floating exchange rate: A floating exchange rate is one that is determined by demand and supply factors in the foreign exchange market, and not influenced by any official intervention.
Managed exchange rate: A managed exchange rate is an exchange rate that is allowed to float within a specific range, but with official intervention to maintain the value within that range.
Cross exchange rate: A cross exchange rate is the exchange rate between two currencies, neither of which is the official currency of the country in which the quote is provided.
Direct and Indirect exchange rate: Direct and Indirect exchange rates are quotes of the value of one currency in terms of another.
Nominal exchange rate: Nominal exchange rate is the price of one currency in terms of another in today's prices.
Real exchange rate: A real exchange rate is a rate that takes into account the prices of goods and services in two countries.
Effective exchange rate: An effective exchange rate is a weighted average of a country's currency against a basket of other currencies, and is used to measure the country's competitiveness in the international market.
"Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro."
"The exchange rate is also regarded as the value of one country's currency in relation to another currency."
"For example, an interbank exchange rate of 131 Japanese yen to the United States dollar means that ¥131 will be exchanged for US$1 or that US$1 will be exchanged for ¥131."
"In this case, it is said that the price of a dollar in relation to yen is ¥131, or equivalently that the price of a yen in relation to dollars is $1/131."
"Each country determines the exchange rate regime that will apply to its currency."
"For example, a currency may be floating, pegged (fixed), or a hybrid."
"Governments can impose certain limits and controls on exchange rates."
"Countries can also have a strong or weak currency."
"There is no agreement in the economic literature on the optimal national exchange rate policy."
"In floating exchange rate regimes, exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers."
"The spot exchange rate is the current exchange rate, while the forward exchange rate is an exchange rate that is quoted and traded today but for delivery and payment on a specific future date."
"The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell that currency."
"The quoted rates will incorporate an allowance for a dealer's margin (or profit) in trading."
"...or else the margin may be recovered in the form of a commission or in some other way."
"Different rates may also be quoted for cash, a documentary transaction, or for electronic transfers."
"The higher rate on documentary transactions has been justified as compensating for the additional time and cost of clearing the document."
"On the other hand, cash is available for resale immediately, but incurs security, storage, and transportation costs."
"the cost of tying up capital in a stock of banknotes (bills)."
"24 hours a day except weekends (i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday)."