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Glossary · markets

What is Exchange rate?

The price of one currency expressed in another.

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Exchange rates move constantly, driven by interest-rate differentials, trade flows, capital flows, and expectations. The 'mid-market' rate is the true midpoint between buy and sell prices; banks add a spread on top.

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Frequently asked questions

Fixed vs floating exchange rate?

Floating rates move freely with market forces. Fixed (pegged) rates are held to a target by the central bank, sometimes with capital controls.

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