Okuzeka
Economics vocabulary · Trade and Exchange Rates

Exchange rate

Meaning in economics, with examples

nounCore term

In economics, exchange rate means: The price of one currency expressed in another, for example how many Turkish lira you need to buy one US dollar or one euro.

In Turkish: döviz kuru, kur

How it is used

Exchange rates can be floating (set by the market), fixed or managed. The news says a currency strengthens or weakens against the dollar, and firms worry about exchange rate risk and volatility.

Example sentences

  1. Exporters prefer a stable exchange rate because it makes long-term contracts easier to plan.

  2. Under a floating exchange rate, the value of the currency is set by supply and demand in the market.

Common collocations

  • floating exchange rate
  • fixed exchange rate
  • exchange rate risk
  • exchange rate volatility
  • depreciationA fall in the value of a currency against other currencies under a floating exchange rate, driven by market forces rather than an official decision.
  • devaluationAn official decision by a government or central bank to lower the value of its currency under a fixed or pegged exchange rate.
  • exportA good or service sold to buyers in another country; as a verb, to sell goods or services abroad.
  • importA good or service bought from producers in another country; as a verb, to bring goods or services in from abroad.
  • balance of paymentsA record of all money flows between a country and the rest of the world over a period, divided into the current account and the capital and financial account.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Trade and Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.