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Exchange rate
Exchange Rate
An advantage to a floating exchange rate is the fact that it tends to be more economically efficient. However, floating exchange rates tend to be more volatile, depending on the particular currency. Pegged exchange rates are generally more stable, but, since they are set by government fiat, they may take political rather than economic conditions into account. For example, some countries peg their exchange rates artificially low with respect to a major trading partner to make their exports to that partner artificially cheap. See also: Currency pair, Eurodollar.
exchange rate
When the exchange rate between the foreign currency of an international investment and the U.S. dollar changes, it can increase or reduce your investment return. Because foreign companies trade and pay dividends in the currency of their local market, you will need to convert the cash you receive from dividends or the sale of the investment into U.S. dollars. Therefore, if the exchange rate changes significantly between the time you buy and the time you sell, it can sometimes turn a positive return in the investment itself into a loss for the investment in total, or vice versa.
International investment returns increase when the dollar weakens in value against another currency, because each unit of foreign currency translates into more U.S. dollars. On the other hand, if the U.S. dollar strengthens against the foreign currency, it translates each foreign currency unit into fewer U.S. dollars and therefore diminishes your returns.
Exchange rate.
exchange rate
The price of one country's currency expressed in terms of another country's currency; for example, one UK pound (£) = two US dollars ($). Because there are a large number of countries participating in the international economy, multi-exchange rate systems are required in order to synchronize and, in some cases, coordinate and harmonize exchange rates.![Exchange rate definition economics Exchange rate definition economics](https://i.routestofinance.com/img/us-economy-2017/fixed-exchange-rate-definition-pros-cons-examples.jpg)
exchange rate
The price of one CURRENCY expressed in terms of some other currency. Fig. 66 (a) shows the rate, or price, at which dollars ($s) might be exchanged for pounds (£s). The demand curve (D) for £s is downwards-sloping, reflecting the fact that if £s become less expensive to Ameri-cans, British goods, services and assets will become cheaper to them. This causes Americans to demand greater quantities of British goods, etc., and therefore greater amounts of £s with which to buy those items. The supply curve (S) of £s is upwards-sloping, reflecting the fact that as the dollar price of £s rises, American goods, services and assets become cheaper to the British. This causes the British to demand greater quantities of American goods, etc., and hence the greater the supply of £s offered in exchange for $s with which to purchase those items. The equilibrium rate of exchange between the two currencies is determined by the intersection of the demand and supply schedules ($2 = £1, in Fig. 66 (a).![Exchange Exchange](https://cf.ppt-online.org/files/slide/y/YgrC2FuWnem9HSt54QiBx7KpaMbk6c8oNzIVlj/slide-4.jpg)
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