What Is Exchange Rate? Meaning & Example
Definition
An exchange rate is the price of one currency in terms of another. Rates change constantly based on trade, interest rates, inflation and sentiment.
Related terms
Forex, short for foreign exchange, is the global market for trading currencies. It is the largest financial market in the world by trading volume and runs around the clock on weekdays.
Forex PairA forex pair quotes the value of one currency in terms of another. The first currency is the base and the second is the quote currency.
Interest RateAn interest rate is the cost of borrowing money or the reward for saving it, shown as a yearly percentage. Central bank rate decisions influence rates throughout the economy.
What is Exchange Rate?
An exchange rate is the price of one currency in terms of another. Rates change constantly based on trade, interest rates, inflation and sentiment.
Can you give an example of Exchange Rate?
If the exchange rate is 1.25 dollars per pound, exchanging 100 pounds gives 125 dollars.