Exchange Rates

            Before we can discuss the foreign exchange market and trading, we must have a clear comprehension of exchange rates. The price of a currency in terms of another is called an exchange rate. At 1 P.M London time on September 7, 2017 you would have needed 1.2000 US Dollars to purchase one unit of the European currency, the euro, so the Dollar’s exchange rate against the euro, commonly referred to as EURUSD, was $1.2000 per euro. Exchange rates are among the most vital prices in an open economy, due to their direct influence on multiple macroeconomic factors and essentially the prices of all goods and services within an economy. Exchange rates also allow us to compare the prices of different countries’ goods and services.

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