BANKING AFFAIRS

Detailed explanation-1: -An exchange rate is defined as the amount of domestic currency that is required to purchase one unit of foreign currency.

Detailed explanation-2: -An exchange rate is a rate at which one currency will be exchanged for another currency.

Detailed explanation-3: -The exchange rate is also known as the External Value of Domestic Currency. It is the rate at which the imports and exports of a country are valued at a given point of time. Foreign Exchange refers to the currencies of countries other than the domestic currency of a given country.

Detailed explanation-4: -In a currency union, one currency is issued which is legal tender in the union’s member countries. From the point of view of the currency union area, this currency is a domestic currency, and all other currencies are foreign currencies.

Detailed explanation-5: -A convertible currency is any nation’s legal tender that can be easily bought or sold on the foreign exchange market with little to no restrictions. A convertible currency is a highly liquid instrument as compared with currencies that are tightly controlled by a government’s central bank or other regulating authority.