Exchange Rate

Exchange Rate refers to the value of one currency in relation to another currency. It determines how much of one currency can be exchanged for a unit of another currency and is influenced by various factors including Interest Rates, inflation, and economic stability.

For example, if the exchange rate between the US Dollar (USD) and the Euro (EUR) is 1 USD = 0.85 EUR, it means that 1 US Dollar can be exchanged for 0.85 Euros.

In a case where the exchange rate fluctuates to 1 USD = 0.90 EUR, the value of the US Dollar has appreciated relative to the Euro, making it more expensive for Europeans to buy US goods.