exchange rate

noun

|Updated on: 13 Jun 2018

Definition of exchange rate

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

See exchange rate defined for English-language learners

Recent Examples of exchange rate from the Web

Americans are attracted by the country’s increased safety (largely thanks to the peace deal) and the decline in value of the peso, which makes for a favorable exchange rate.

— christina austin, Fortune, "Why You Should Care About Colombia's Presidential Election This Weekend," 24 May 2018
One US dollar today is worth 68,915 bolivares, according to the black market exchange rate the locals use.

— andrea diaz, CNN, "'World of Warcraft's' virtual gold is seven times more valuable than Venezuela's real money," 8 May 2018
In 1944, at the Bretton Woods Conference, Keynes helped to negotiate a way of harmonizing exchange rates that gave national governments enough elbow room to boost their domestic economies when necessary.

— caleb crain, The New Yorker, "Is Capitalism a Threat to Democracy?," 7 May 2018
But some of Switzerland’s major exports aren’t sensitive to exchange ratesWhile sectors like tourism suffered, the overall economy avoided recession and, in recent months, has been growing at around a 2% annual rate.

— brian blackstone, WSJ, "How Switzerland Lost a Currency Battle, but Won the War," 20 Apr. 2018
His officials have shut currency exchanges, chased money-changers off the streets and fixed the exchange rate.

— The Economist, "Iran braces for economic war with America," 17 May 2018
Ponzi tried to take advantage of wildly fluctuating exchange rates following World War I, buying and selling international postal reply coupons and promising investors a 50 percent return on their money within 45 days.

— simon r. gardner, The Atlantic, "98 Years of Mail Fraud," 4 May 2018
The system will choose the median value of these votes as the official exchange rate.

— timothy b. lee, Ars Technica, "Basis—the “stable” cryptocurrency with $133 million invested—explained," 25 Apr. 2018
Sanofi’s sales of generic medicines fell 3.3 percent at constant exchange rates last year, while overall sales climbed 5.6 percent, the company said in February.

— phil serafino, Bloomberg.com, "Sanofi to Sell Generics for $2.4 Billion to Focus on Biotech," 17 Apr. 2018

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.

First Known Use of exchange rate

1855

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of EXCHANGE RATE

exchange rate

noun

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