Best answer: What is foreign exchange rate Class 12?

What is the meaning of foreign exchange rate?

In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, or rate) between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency.

What is foreign exchange rate example?

the price of one currency in terms of another currency; for example, if the exchange rate for the euro (€) is 132 yen (¥), that means that each Euro that is purchased will cost 132 yen.

What is a foreign exchange rate quizlet?

A foreign exchange rate is the price of one currency expressed in terms of another.

What is an exchange rate with respect to currencies quizlet?

An exchange rate is the price of one currency (domestic –DC or foreign –FC) in terms of another. For an exchange rate of 1.25 USD/EUR we read the “/” as per. So its $1.25 USD per Euro.

How are exchange rates are determined?

Currency prices can be determined in two main ways: a floating rate or a fixed rate. A floating rate is determined by the open market through supply and demand on global currency markets. Therefore, if the demand for the currency is high, the value will increase.

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Which of the following is the definition of foreign exchange risk?

Foreign exchange risk refers to the losses that an international financial transaction may incur due to currency fluctuations.

How are exchange rates used in international trade?

An international exchange rate, also known as a foreign exchange (FX) rate, is the price of one country’s currency in terms of another country’s currency. … When selling products internationally, the exchange rate for the two trading countries’ currencies is an important factor.

What happens if the dollar appreciates?

If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. … The change in relative prices will decrease U.S. exports and increase its imports.

How can exchange rates indicate economic health?

Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country’s relative level of economic health. A higher-valued currency makes a country’s imports less expensive and its exports more expensive in foreign markets.