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Exchange rates - introduction

Did you know?

The eight most traded currencies in the world (in no specific order) are the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Japanese yen (JPY).

Source: http://www.investopedia.com/ask/answers/06/maincurrencypairs.asp

Exchange rate systems

key_terms

Exchange rate

An exchange rate is the price of one currency expressed in terms of another, e.g. 1 U.S. dollar = 30.13 Thai baht.


An exchange rate system is the way in which the exchange rate is determined.

On the following pages, we consider the following topics in detail:

  • Floating exchange rates
  • Changes in the exchange rate
  • Effects of exchange rate changes
  • Fixed exchange rates
  • Managed exchange rates