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Tuesday, March 25, 2008

Exchange rate

In finance, the exchange rates(also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 123 Japanese yen (JPY, ¥) to the United States dollars (USD, $) means that JPY 123 is worth the same as USD 1. The foreign exchange market is one of the largest market in the world. By some estimates, about 2 trillion USD worth of currency changes hands every day .

The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.

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