currency exchange rate

Currency Exchange: Key Facts

An exchange rate is a rate at which one currency will be exchanged for another currency and affects trade and the movement of money between countries. The exchange rate between two currencies is commonly determined by the economic activity, market interest rates, gross domestic product, and unemployment rate in each of the countries. Commonly called market exchange rates, they are set in the global financial marketplace, where banks and other financial institutions trade currencies around the clock based on these factors. Changes in rates can occur hourly or daily with small changes or in large incremental shifts.

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