The General Overview of the Exchanges Rates
Exchange rate also named as “foreign exchange market price or exchange rate”. It is one of the most important tools of adjusting the international trade. Each country has itself currency. When a business man coming from a country wants to make international trade with the people in different country, he must exchange his money into the currency of that country. As the name of the currency in different countries around the world is different, so a country’s currency against the currencies of other countries to set an exchange rate of the exchange rate (Baron, 1976）.
For example, a value of 100 yuan of goods, if the dollar-yuan exchange rate is 8.25, then this commodity prices in international markets is 12.12 U.S. dollars. If the dollar exchange rate rose to 8.50, meaning that the dollar compared with the RMB devaluated with fewer dollars will buy this product. This product in the international market price is 11.76 U.S. dollars. So the commodity in the international market price will become lower. Lower commodity prices, competitiveness becomes higher, less easy to sell. Conversely, if the dollar fell 8.00, that depreciation of the dollar, the yuan appreciation, then, this commodity in the international market price is 12.5 U.S. dollars, buy less.
