An exchange rate is the price of one currency in terms of another – in other words, the purchasing power of one currency against another.
Currencies are traded in foreign exchange markets and the volume of money bought and sold is huge! Daily foreign exchange market turnover averages over $4 trillion
Exchange rates are an important instrument of monetary policy – a growing number of countries are intervening in currency markets as part of their economic strategies
Measuring the exchange rate
Exchange rates are expressed in various ways: