foreign exchange rate

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Foreign exchange rate

The rate of one currency unit expressed in terms of another.

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.

foreign exchange rate

References in periodicals archive ?
Past statistics show the economic conditions in our major export markets, such as Europe, China and the United States, matter more than the foreign exchange rate," he said, adding that the market is having a "schoolbook reaction" to the weak yen.
The remaining 18 percent increase was due to higher sales volumes, favorable pricing impact, favorable foreign exchange rates and improved operating efficiencies.
It is natural for foreign exchange rates to move as they are traded in the market, but a sharp fluctuation is not desirable,'' Yosano said during a news conference when asked about the yen's current rise versus the U.
Declining to comment on the current dollar-yen exchange rates, Tanigaki told reporters that if foreign exchange rates are judged as not moving in line with economic fundamentals, Japan will ''take appropriate action at an appropriate time.
It claims it can offer foreign exchange rates up to 5 percent lower than bank-offered rates.
Global Banking News-March 25, 2014--Bank of Canada planning changes to foreign exchange rates
Japanese monetary authorities will monitor currency fluctuations carefully, as volatility in foreign exchange rates will affect business sentiment, Vice Finance Minister for International Affairs Zembei Mizoguchi said Thursday.
Translation exposure stems from differences in foreign exchange rates between consolidation dates and the effects of these changes on the valuation of a company's assets and liabilities abroad.

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