In finance, an exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one forex microstructure’s currency in relation to another currency.
Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuous: 24 hours a day except weekends, i. 20:15 GMT on Sunday until 22:00 GMT Friday. In the retail currency exchange market, different buying and selling rates will be quoted by money dealers. Most trades are to or from the local currency. The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell that currency.
Currency for international travel and cross-border payments is predominantly purchased from banks, foreign exchange brokerages and various forms of bureaux de change. These retail outlets source currency from the inter-bank markets, which are valued by the Bank for International Settlements at 5. In the foreign exchange market, a currency pair is the quotation of the relative value of a currency unit against the unit of another currency. 3225 means that 1 Euro will buy 1. In other words, this is the price of a unit of Euro in US dollars. Here, EUR is called the “Fixed currency”, while USD is called the “Variable currency”. There is a market convention that determines which is the fixed currency and which is the variable currency.