Exchange rates

Exchange rates: what are they, where do they occur most often, and why are they important?

Exchange rates are the price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. For example, the higher the exchange rate for one euro in terms of one yen, the lower the relative value of the yen.

In most financial papers, currencies are expressed in terms of U.S. dollars, while the dollar is commonly compared to the Japanese yen, the British pound and the euro. As of the beginning of 2006, the exchange rate of one U.S. dollar for one euro was about 0.84, which means that one dollar can be exchanged for 0.84 euros.

Exchange Rates are very important for any country as they determine the level of imports and exports. If a domestic currency appreciates with respect to a foreign currency, imported goods will be cheaper in the domestic market and local companies would find that their foreign competitor's goods become more attractive to customers. If the country has a strong currency then its goods become more expensive in the international market, which results in lost competitiveness. This is the reason that China, despite much pressure from the United States, is not letting its Yuan appreciate.

look at some of todays exchange rates by viewing this link:
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html
 
Compare the exchange rates from certain countries by looking at these graphs: