Meaning of Foreign Exchange Rate:

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The rate at which the currency of one country is exchanged for the currency of another country is called the exchange rate or the rate of exchange. In other words the exchange rate is the price which paid in domestic currency for a foreign currency.

 

Significance of Foreign Exchange Rate:

 

I.    By linking the currencies of different countries foreign exchange rate facilities the comparison of international costs and prices.
II.    Foreign exchange rate also governs the flow and direction of foreign trade.

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