exchange rate

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 This strategy requires significant investment and capital mobility to ensure a strong exchange rate union and currency convertibility. — Landry Signé, Quartz Africa, "How the France-backed African CFA franc works as an enabler and barrier to development," 7 Dec. 2019 Related Articles Beijing imposed similar controls in October 2015 after a change in the exchange rate mechanism prompted markets to bet the yuan would fall. — Joe Mcdonald, Twin Cities, "Lashing back, China lets yuan drop, halts US farm purchases," 5 Aug. 2019 Your benefit is calculated in U.S. dollars and does not change based on fluctuations in exchange rates. — Nathan Bachrach And Amy Wagner, Cincinnati.com, "Simply Money: Can you still get Social Security benefits if retiring abroad?," 12 June 2019 For more than two decades, the Lebanese have simultaneously used American dollars and Lebanese pounds, an arrangement made possible by a central bank policy that kept the exchange rate fixed at about 1,500 pounds to the dollar. — Ben Hubbard, New York Times, "Economic Crisis Looms as Protests Rage in Lebanon," 15 Nov. 2019 For him, this was a time when the policies that economists almost universally endorsed—tax breaks, austerity, deregulation, free trade, monetarism, floating exchange rates, reduced antitrust enforcement, low inflation, among others—were enacted. — Robin Kaiser-schatzlein, The New Republic, "The Tyranny of Economists," 30 Sep. 2019 The government also inflated the exchange rate, giving them a 17% premium. — Mohammed Daraghmeh, Fox News, "Palestinian leader fires advisers, wants bonuses returned," 20 Aug. 2019 Part of China's arsenal China's central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. — CBS News, "Investors fear China may "weaponize" its currency in trade fight with U.S.," 5 Aug. 2019 China’s central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. — Joe Mcdonald, Twin Cities, "Lashing back, China lets yuan drop, halts US farm purchases," 5 Aug. 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

12 Dec 2019

Cite this Entry

“Exchange rate.” The Merriam-Webster.com Dictionary, Merriam-Webster Inc., https://www.merriam-webster.com/dictionary/exchange%20rate. Accessed 12 December 2019.

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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