Whether you’re shopping online and the shop you’re buying from is in a different country, receiving income from Google adsense in $US dollars, travelling overseas and withdrawing money from an ATM or need to send money to a relative overseas you’ll need to know what the exchange rate is between your currency and the local currency.
In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 120 Japanese Yen (JPY) to the U.S. dollar means that ¥120 is worth the same as $1. An exchange rate is also known as a foreign-exchange rate, forex rate or FX rate. The foreign exchange market is one of the largest markets in the world. By some estimates, about $2 trillion worth of currency changes hands every day.
An exchange rate quotation is given by stating the number of units of a price currency that can be bought in terms of 1 unit currency. For example, in a quotation that says the Euro-U.S. dollar exchange rate is 1.2 U.S. dollars per Euro, the price currency is the U.S. dollar and the unit currency is the Euro
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