What is a Currency Exchange Rate?
The foreign exchange currency market is the largest financial market on the planet. Basically, a consortium of world banks, this consortium/market sets the currency exchange rate, known variously as the foreign exchange rate, the FOREX rate. The currency exchange rate is, in its most elementary terms, how much one nation’s currency is worth in comparison to all other national currencies. Currency is, of course, money. The currency exchange rate establishes how much for example, one dollar of United States money is worth in Japanese money, known as yen. In this particular case, the quoted rate, the official worth of one United States dollar (USD) is 102 Japanese yen (JPY). This is the quoted currency exchange rate between the USD and the JPY, and is known as the “spot rate,” the rate of exchange right at the moment. Occasionally, the rate might be quoted as the “forward exchange,” an exchange rate that’s traded today, but actual payment is delayed until a specified future date. A number
