What is the meaning of a foreign exchange rate?
Foreign exchange rates are associated with international business and capital flows. Consumers and politicians monitor exchange rates, prior to making financial decisions.IdentificationForeign exchange occurs when domestic currency is exchanged for foreign currency. Foreign exchange rates describe the ratios of currency values between countries. For example, 100 yen may purchase one dollar. The yen to dollar exchange rate is then 100 to 1.FeaturesStrong exchange rates are associated with a stable commercial environment for the home country. Conversely, falling exchange rates may either signal recession, or political strife. Additionally, capital flows out of countries with low interest rates into high-interest rate environments, as investors covet high-return fixed income investments.Therefore, high interest rates support increased exchange rates.ConsiderationsForeign exchange rates influence international trade. Low exchange rates improve the domestic export and tourism economy. At th
