An Exchange Rate is the price of one currency expressed in terms of another currency. It's basically what it costs to buy a unit of one currency with units of another currency. Exchange rates fluctuate all the time, and they have a big impact on trade and the movement of money between countries.Most currencies are traded against the U.S. dollar, so when you see an exchange rate for a foreign currency, it will be expressed as how many U.S. dollars you need to buy 1 unit of that foreign currency (or vice versa). For example, if you're traveling to Europe and want to buy euros, you'll need to know what the current exchange rate is so that you can budget accordingly.Exchange rates are determined by supply and demand in the market place - when there's more demand for a certain currency than there is supply, its value goes up; when there's more supply than demand, its value goes down (and vice versa).So why do exchange rates go up or down?There are lots of factors that can influence them: economic conditions in different countries, interest rates set by central banks, geopolitical events , etc..So what does all this mean for travelers?Well hopefully now you have a basic understanding about what an exchange rate is! Just remember that it's always important to stay up-to-date on current rates before making any international transactions - whether it's buying foreign currencies or exchanging your traveler's checks/cash . And finally... enjoy your vacation!
