In simple words the rate of exchange is the value of the currency of one country in comparison to the currency of another country. Like the value of a dollar can be more or less than that of another country’s currency like the rupee or pound. Therefore certain ground rules need to be established in order to make transactions easier. There are three main types of exchange, they are as follows:

  • Flexible exchange rate
  • Crawling peg
  • Fixed exchange rate

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