Exchange Rates

• Exchange rate


  The price of one currency expressed in terms of another currency
• Floating exchange rate


  The value of a currency is determined by the supply and demand for it in the foreign exchange market
• Appreciation


  An increase in the value of a currency in terms of another within a floating exchange rate system
• Depreciation


  A decrease in the value of a currency in terms of another within a floating exchange rate system
• Fixed exchange rate


  The central bank buys and sell foreign currencies to ensure the value of its currency remains at the same rate
• Devaluation


  When the value of a currency is deliberately decreased within a fixed exchange rate system
• Revaluation


  When the value of a currency is deliberately increased within a fixed exchange rate system
• Managed exchange rate


  The monetary authority intervenes periodically to ensure the exchange rate remains within a desirable range