What is an Exchange Rate?

The foreign exchange rate is the rate or value at which one currency can be converted to another currency. It can also be called currency conversion, rate of exchange, and currency exchange. For an example using US currency, if the current rate of exchange between the United States dollar and the Canadian dollar is 1 USD = 1.1191 CAD, one US dollar will be worth 1 dollar and .12 cents in Canadian money.

It is important to know the current exchange rate when travelling to other countries because if a dollar is not dollar elsewhere, you need to budget accordingly, and the exchange rate can vary. Most often, your debit card will figure the rate automatically, but check with your financial institution.

What is the Forex?

The Forex, or the foreign exchange market, is where currency trading takes place. Currencies trade worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney. The overall forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world. more >