The
Definition Of

Measuring Exchange Rate

An exchange rate measures the value of one currency in units of another currency. As economic conditions change, exchange rates can change substantially. A decline in a currency’s value is often referred to as depreciation. When the British pound depreciates against the U.S. dollar, this means that the U.S dollar is strengthening relative to the pound. The increase in a currency value is often referred to as appreciation.

Share it:

More from this Section

  • Foreign exchange transaction
    A foreign exchange transaction agreed upon today but to be settled at some specified future date, often one, two, or three months after the transaction date.
  • Taylor rule
    Taylor rule means Economist John Taylor’s monetary policy rule that explains how the federal funds rate target is set.
  • Foreign investment risk matrix (FIRM)
    Foreign investment risk matrix (FIRM) refers to a graph that displays financial and political risk by intervals, so that each country can be positioned ...
  • Rights Issue
    Rights Issue is an issue of securities offered to existing shareholders/ bond holders on a pre-emptive or priority basis.
  • No deposit investment products
    No deposit investment products is the bank sales of mutual funds, annuities, and other nondeposit instruments offered through the
  • Capital budgeting
    Capital budgeting is the analytical approach used to determine whether investment in long-lived assets or projects is viable.
  • Cost, insurance, and freight (CIF)
    Cost, insurance, and freight (CIF)— Exporter’s quoted price including the cost of packaging, freight or carriage, insurance premium, and other charges ...