An exchange rate is the value of a country’s currency versus that of another country or economic zone. Most exchange rates are free-floating and will rise or fall based on supply and demand in the market.
The exchange rate plays an important role for country’s when exporting goods and import raw materials.
Formula to calculate exchange rate.
If we exchange $100 and for euros,we get €80 back. Calculate the exchange rate.
Therefore, the exchange rate is 1.25.