What "exchange rate" means in finance

An exchange rate is the value of one currency in relation to another. It is the rate at which one currency can be exchanged for another. Exchange rates fluctuate constantly based on various economic and geopolitical factors, such as inflation, interest rates, political stability, and trade relations. Exchange rates are important for international trade and investment, as they determine the relative value of different currencies and can impact the profitability of transactions between countries.