"In finance, an exchange rate is the rate at which one currency will be exchanged for another currency."
The value of one currency relative to another. Exchange rates are influenced by factors such as international trade, government policy, and global economic conditions.
Introduction to Exchange Rates: Definition and Components: An overview of what exchange rates are, their importance in global trade, and the factors that determine them.
Types of Exchange Rates: Fixed vs. Floating: The difference between fixed and floating exchange rates, with examples of countries that use each system.
The Foreign Exchange Market: An explanation of the foreign exchange market and how currencies are bought and sold.
Exchange Rate Systems: A look at the different types of exchange rate systems, including a fixed exchange rate, floating exchange rate, and managed float.
Determinants of Exchange Rates: An analysis of the main factors that affect exchange rates, including inflation, political stability, and trade balances.
Purchasing Power Parity: A concept that compares the cost of living in different countries by calculating the exchange rate that would make the prices of identical goods and services equal.
International Capital Flows: A discussion of the impact of international capital flows on exchange rates, such as foreign investment and debt.
International Trade: An exploration of the relationship between international trade and exchange rates, including the effects of balance of payments and currency manipulation.
Exchange Rate Policy: An overview of government policies aimed at stabilizing exchange rates, such as exchange rate targeting and exchange rate pegging.
Currency Exchange Rates and Economic Policy: How exchange rates are impacted by economic policies, such as interest rate changes and fiscal policy decisions.
Exchange Rate Risk Management: A look at how businesses and investors manage exchange rate risk through hedging and other strategies.
Impacts of Exchange Rate Fluctuations: A discussion of how fluctuations in exchange rates can have macroeconomic effects, including inflation, growth, and employment.
Fixed Exchange Rate: A fixed exchange rate is when a country pegs its currency at a fixed rate to another currency or a basket of currencies, usually the US dollar.
Floating Exchange Rate: A floating exchange rate is when the value of a currency is determined by the forces of supply and demand in the foreign exchange market.
Managed Floating Exchange Rate: A managed floating exchange rate system is when a country's central bank intervenes in the foreign exchange market to influence the value of its currency.
Crawling Peg Exchange Rate: A crawling peg exchange rate is when a currency's value is adjusted gradually, usually in response to inflation or economic growth.
Dual Exchange Rate: A dual exchange rate system is when a country has two different exchange rates for its currency, one official rate and one black market rate.
Nominal Exchange Rate: A nominal exchange rate is the rate at which one currency can be exchanged for another currency.
Real Exchange Rate: A real exchange rate is the nominal exchange rate adjusted for inflation.
Effective Exchange Rate: An effective exchange rate is the weighted average of a country's bilateral exchange rates with its major trading partners.
Cross Exchange Rate: A cross exchange rate is a currency exchange rate between two currencies that are not the domestic currency of the country in which the exchange rate is quoted.
"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)."