The exchange rate is the value of one currency in terms of another currency. For example, an exchange rate of 2.05 $/£ means that one British pound costs $2.05. Current exchange rates can be found on many different sites, although the quoted rates usually pertain to large transactions that have taken place on international foreign exchange (FX) markets. An individual needing to buy small amount of currency at a bank or an exchange service will find the rates less favorable.
In general, the value of a currency increases when demand for the currency increases. For example, foreigners will increase their demand for a currency if their demand for a country's products increases. Hence, if Europeans suddenly prefer American wine to French wine, they will increase their demand for US dollars and put upward pressure the exchange rate. The dollar will appreciate relative to the euro. If American increase their purchases of Chinese goods, they will demand more Chinese currency (the yuan), putting upward pressure on the yuan. If the yuan floated relative to the dollar, the yuan would appreciate relative to the dollar and the dollar would depreciate relative to the yuan.
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NY Fed | FX rates discontinued
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New York Fed Discontinues Publication of Foreign Exchange Rates
The New York Fed announced its decision to discontinue the publication of foreign exchange rates on December 31, 2008. |