what is an exchange rate 
an exchange rate is the value of a nation s currency when it is traded for another currency the relative strength or weakness of a nation s currency has a strong impact on its trade with other nations on its tourism industry and on the prices its consumers pay for imports exchange rates are always viewed in relation to the exchange rate of another currency for example the exchange rate from u s dollars to euros was 1 07 at the end of june 2024 that means one euro could be exchanged for 1 07 understanding exchange ratesthe exchange rate between any two currencies is commonly determined by interest rates economic activity gross domestic product and the unemployment rate in each of the countries commonly called market exchange rates currency prices are set in the global marketplace where financial institutions money managers and speculators trade currencies around the clock this is called the forex or f x market although the market has no physical presence and no owner changes in rates can occur hourly or daily with small changes or in large incremental shifts an exchange rate is commonly quoted using an acronym for the national currency it represents usd represents the u s dollar eur represents the euro it would be eur usd if you were quoting the currency pair for the dollar and the euro an exchange of u s dollars to japanese yen is labeled as usd jpy an exchange rate of 100 means that one dollar equals 100 yen 