The exchange rate is the value of one currency relative to another currency. It is the price at which one currency can be exchanged for another. Exchange rates are influenced by various factors, including global economic conditions, political stability, and market demand for each currency.
For example, if the exchange rate between the US dollar and the euro is 1 USD = 0.85 EUR, it means that one US dollar can be exchanged for 0.85 euros.
Exchange rates are crucial for international trade and commerce, as they affect the cost of goods and services, as well as investment opportunities in foreign markets. A stronger domestic currency can make imports cheaper, while a weaker currency can make exports more competitive. Investors and businesses must stay informed about exchange rates to make informed decisions about their financial transactions.