Exchange Rate

Exchange Rate Meaning:
In foreign exchange terminology, the exchange rate or rate of exchange is the market-determined amount of the base or primary currency expressed in units of the counter or secondary currency. Typically, an exchange rate would be quoted for delivery in two business days or value spot.

An exchange rate quotation typically means that a set amount of the base currency can be exchanged at that quoted rate for the resulting amount of the other counter-currency, and vice versa for value spot or two business days. The traditional exchange rate quotations used in the interbank forex market vary depending on the currency pair involved. For example, in EUR/USD, the Euro is the base currency, while the U.S. Dollar is the counter currency. In this case, the exchange rate would typically be quoted in U.S. Dollars per Euro, like 1.3500 U.S. Dollars/Euro. Conversely, in USD/JPY, the U.S. Dollar is the base currency, while the Japanese Yen is the counter currency and the exchange rate would usually be expressed in Yen points per U.S. Dollar or 90.00 Yen per U.S. Dollar.