Exchange Rate is the value of a nation’s currency in conditions of another country’s currency. An exchange rate hence has two components, the home currency and foreign currency, and can be quoted either directly or indirectly. In a direct quotation, the value of a unit of foreign currency is expressed in terms of the home currency. In an indirect system, the value of a unit of home currency is expressed in terms of the foreign currency. An exchange rate does not have the home currency as one of the two currency mechanism is known as a cross currency or cross rate.
Exchange Rate Definition
