FX Rate


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FX Rate

Exchange Rate

The value of two currencies relative to each other. For example, on a given day, one may trade one U.S. dollar for a certain number of British pounds. A currency's exchange rates may be floating (that is, they may change from day to day) or they may be pegged to another currency. A floating exchange rate is dependent on the supply and demand of the involved currencies, as well as the amount of the currency held in foreign reserves. On the other hand, a government may peg its currency to a certain amount in another currency or currency basket. For example, the Qatari riyal has been worth 0.274725 dollars since 1980.

An advantage to a floating exchange rate is the fact that it tends to be more economically efficient. However, floating exchange rates tend to be more volatile, depending on the particular currency. Pegged exchange rates are generally more stable, but, since they are set by government fiat, they may take political rather than economic conditions into account. For example, some countries peg their exchange rates artificially low with respect to a major trading partner to make their exports to that partner artificially cheap. See also: Currency pair, Eurodollar.
References in periodicals archive ?
But more often, FX rates are manipulated by speculators.
A paradox at first glance, has a simple explanation: certain governments have to sell haven assets in order to accumulate dollar-denominated money liquidity to be spent supporting national FX rates (mainland China), whilst other governments, stripped of cash due to falling external trade revenues, are selling US debt in order to meet their fiscal targets (Saudi Arabia), Sputnik reported.
El-Masry (2006) investigated the outcome of FX rate exposure on stock returns of UK industries and found that a greater proportion of considerable FX rate exposure is accredited for the trade-weighted nominal exchange rate.
Since many MNEs now have the majority of their activity outside their home country, analysts and other users need to understand both the complexity and potential effects on performance evaluation and reported results that daily FX rate fluctuations cause when accounting records are kept in multiple currencies.
As per the scheme, if a Citi Card customer signs up with the bank by February 28, 2009 and spends a minimum of USD300, benchmark FX rate of KRW990/USD would be applied to a spending of USD10.
FX rate fluctuations may have a significant effect on assets, liabilities and equity beyond the effects that flow through the raceme statement.
The reason, we believe, is that hedging theories assume a static world in which all factors apart from FX rates stay exactly the same.
Automating FX rate updates is a common feature of most modern financial systems; often it's a straightforward integration that takes a couple of weeks to deploy and test.
As alleged in the case, Bharara and Schneiderman's joint release states that BNYM "systematically misrepresented how it handled its customers' FX transactions," telling customers that its Standing Instruction FX program "was an automated service that allowed a client to rely upon BNYM to obtain an FX rate and execute FX trades on the customer's behalf without any supervision or direct involvement by the customer, and that BNYM would obtain the "best rates" available for its customers.
Crore) Revenue Cost Operating Net Cash Exposure Exposure Exposure Flow Exposure Change in FX rate .
This suggests that the NBR still has a comfort interval for the EURRON FX rate, which could be 4.
It would also be tempting to think an FX rate hovering around the EUR1.