rate of exchange

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Rate of exchange

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

rate of exchange

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

rate of exchange

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
Portfolio balanced model argues that for the determination of exchange rate, prices of stock and rate of exchange rate are inversely related.
Theoretical work on tendencies in the balance of payments, and any adjustments in the rate of exchange, is sparse.
Just as you can shop around for the best rate of exchange to purchase foreign currency, you can look for the most favorable rate of exchange to convert foreign denominated checks into U.S.
He said the meeting was also assured about the stability of the rate of exchange of the hard currency against the pound and about the banking transfers between Sudanese banks and other international funding and banking institutions and world commercial banks.
The Federation of Economic Chambers (SSK), says that a small group of businessmen are trying to provoke a debate and put pressure on the National Bank to introduce a fluctuating rate of exchange as against the euro.
450, while the rate of exchange of Japanese yen remained unchanged, and rate
But the rate of exchange - how much currency you get for your pound - varies widely.
When the exchange rate moves during the time between placing the order and the date of payment (this can be up to 24 months apart), these movements will not affect clients at all, as they have been locked into an agreed rate of exchange.
"The pegging of the Chinese currency, the yuan, to a fixed rate of exchange with the U.S.
''But at the bank they told me the rate of exchange was less for Scottish notes.
Economists and businessmen alike say that the present run on the dollar, which has caused the rate of exchange to reach previously unheard-of levels of RD$22 to US$1, is a psychological phenomenon, reports El Caribe (Dec.