Exchange rate.
In plain English
An exchange rate is how much one currency is worth in another, the price to swap dollars for euros, yen, or pesos. Most major currencies float, meaning the rate moves constantly with supply and demand driven by trade, interest rates, and investor flows. A stronger dollar buys more foreign currency, making imports and overseas travel cheaper for Americans but U.S. exports pricier abroad; a weaker dollar does the reverse. The rate touches anyone who travels, buys imported goods, or invests internationally.
01Why it matters
Exchange rates set the real cost of travel, imported goods, and foreign investments, so a shift in the dollar quietly changes prices and returns even for people who never leave the country.
02The math, step by step
Suppose one dollar buys a certain amount of a foreign currency, and then the dollar strengthens so it buys more. Your trip abroad and imported electronics get cheaper, while a U.S. company selling overseas finds its goods cost foreigners more. The numbers here are illustrative of the direction, not a quoted rate.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
It is not a set price for most major currencies. Floating rates change minute to minute with markets. Some countries do peg or manage their currency, but the dollar and most large currencies move continuously.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.