In plain English
What Exchange rate means
If EUR/USD is 1.10, then one euro costs 1.10 U.S. dollars. Exchange rates move constantly in the foreign exchange market, so the value of a currency pair can change from one moment to the next. Different venues and timing can produce slightly different rates.
Why it matters
Exchange rates affect the value of cross-border payments, trading profits and losses, and the domestic value of foreign assets and liabilities. For forex traders, the exchange rate is the core price being traded, so even small changes can matter when positions are leveraged.
Example
If you exchange €1,000 at 1.10 USD per euro, the simplified conversion gives $1,100 before fees or spread. If the rate later moves to 1.12, the same €1,000 would be worth $1,120. Real transactions can differ because of bid-ask spreads and charges.
Quick answers
Common questions
What does an exchange rate show?+
It shows how much one currency is worth in another currency.
Why do exchange rates change?+
They move with market supply and demand, interest-rate expectations, economic data, and other factors.
Sources