exchange rate

noun

Definition of exchange rate

: the ratio at which the principal unit of two currencies may be traded

Examples of exchange rate in a Sentence

Recent Examples on the Web

All of them highlight organic sales growth, which strips out currency movements and merger impacts, but actual profits aren’t immune to exchange rates. — Aaron Back, WSJ, "Multinationals’ Currency Woes: A Harbinger on Global Growth?," 26 Jan. 2019 Why do policymakers in emerging markets fret so much over exchange rates? — The Economist, "Why countries like Argentina and Turkey fret about exchange rates," 21 June 2018 But Russia’s central bank, which buys foreign currency for the finance ministry, said the resumed purchases will be gradual and modest in daily volumes to keep the ruble exchange rate stable. — Anatoly Kurmanaev, WSJ, "Russia to Restart Foreign Exchange Reserves Buying," 11 Jan. 2019 The daily exchange rate is set by the Chinese central bank and trades in a narrow band against the dollar. — Matt Phillips, The Seattle Times, "As trade war escalates, stock markets shrug — here’s why," 18 Sep. 2018 Since 2003, Venezuela has maintained a web of currency controls that restrict access to U.S. dollars, resulting in multiple exchange rates. — Ian Talley, WSJ, "U.S. Targets Huge Currency Scheme in Venezuela Before Maduro Inauguration," 8 Jan. 2019 Big movements in exchange rates, without similarly supersized shifts in burger prices, can send a currency up or down the index. — The Economist, "Investors are gorging on American assets," 12 July 2018 The investment firm is asking for the 5,000 bitcoins back, which at present exchange rates would be worth over $31.3 million. — Cyrus Farivar, Ars Technica, "Lawyer: My client didn’t steal 5,000 bitcoins, “Period”," 7 Nov. 2018 Currency forwards, which are priced based on relative interest rates, allow U.S. investors to lock in an exchange rate of around ¥104.4 to the dollar one year from now. — Mike Bird, WSJ, "Japan’s Corporate Revolution Deserves Another Look After Selloff," 4 Jan. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'exchange rate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Last Updated

16 May 2019

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The first known use of exchange rate was in 1855

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More Definitions for exchange rate

exchange rate

noun

Financial Definition of exchange rate

What It Is

An exchange rate between two countries' currencies indicates the value of one currency relative to the other.

How It Works

On June 16, 2010, the exchange rate between the dollar and the euro was 1.23 $/€. This means that to obtain one euro, you would need 1.23 dollars. Conversely, if you were about to take a vacation to Europe, you could take $1,000 to the bank and receive €813.01.

Exchange rates can be fixed or floating. If a country fixes its currency to that of another country, the exchange rate between those two currencies will not change. If a country has a floating exchange rate, the rate between its currency and any other currency will adjust to market conditions.

Why It Matters

The exchange rate between two currencies plays a major role in international trade and investment. For instance, if the dollar appreciates, or gains value, relative to the euro, Americans traveling in Europe will have greater purchasing power, but it will be more difficult for the U.S. businesses to export goods.

Changes in the exchange rate are subject to a wide range of factors, such as interest rates, price levels and expected future market conditions.

Source: Investing Answers

exchange rate

noun