2.1.5 Exchange rate
The exchange rate is the price at which one the national money
can be exchanged for another (When transactions are permitted). For example, a
common exchange rate is the Rwandan franc/US dollar exchange rate. If the
RWF/USD exchange is 5.80, this means that 580 Rwandan franc will buy one US
dollar.
The changes in the value of the exchange rate over time are
referred to as appreciations or depreciations. A currency appreciates when its
value rises, relative to another currency, and depreciates when its value
falls, relative to another currency.
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