exchange ratenoun phrase
eks-CHAYNJ rayt
The price at which one currency can be exchanged for another.
"The exchange rate between the euro and the dollar is 1.08 — €1 buys $1.08."
appreciationnoun
uh-pree-shee-AY-shun
An increase in the value of a currency relative to other currencies — it buys more foreign currency than before.
"Dollar appreciation made US exports more expensive for foreign buyers."
depreciationnoun
deh-pree-shee-AY-shun
A decrease in the value of a currency relative to others — it buys less foreign currency than before.
"After the election, the pound suffered a sharp depreciation against the euro."
devaluationnoun
dee-val-yoo-AY-shun
A deliberate, official downward adjustment in a currency's value — a government policy decision, not a market movement.
"China was accused of currency devaluation to make its exports cheaper on world markets."
revaluationnoun
ree-val-yoo-AY-shun
A deliberate upward adjustment in the official value of a currency — the opposite of devaluation.
"Under US pressure, China allowed a modest revaluation of the yuan."
fixed ratenoun phrase
fikst rayt
An exchange rate regime where a currency's value is officially pegged to another currency or to gold.
"Saudi Arabia maintains a fixed exchange rate between the riyal and the US dollar."
floating ratenoun phrase
FLOHT-ing rayt
An exchange rate determined freely by market supply and demand, with no government intervention.
"The euro operates on a floating rate — its value changes every minute on currency markets."
pegnoun / verb
peg
To fix a currency's exchange rate to another currency. The fixed rate itself is called a peg.
"Hong Kong has pegged its dollar to the US dollar since 1983."
forexnoun
FOR-eks
The foreign exchange market, where currencies are bought and sold. The largest financial market in the world by trading volume.
"The forex market trades $7 trillion per day — more than all stock markets combined."
reserve currencynoun phrase
reh-ZURV KUR-en-see
A currency held in large quantities by governments and central banks worldwide as part of their foreign exchange reserves.
"The US dollar accounts for approximately 60% of global reserves, making it the dominant reserve currency."
convertibleadjective
kun-VUR-tih-bul
Describes a currency that can be freely exchanged for other currencies without government restriction.
"Not all currencies are freely convertible — China restricts the free exchange of its yuan."
speculateverb
SPEK-yoo-layt
To buy or sell currencies hoping to profit from changes in their value — accepting significant risk.
"Currency speculators profit by buying a currency before it appreciates and selling before it falls."
currency warnoun phrase
KUR-en-see wor
Competitive devaluation by multiple countries, each trying to make its currency weaker than others' to boost export competitiveness.
"Economists warned that simultaneous central bank loosening could trigger a currency war."
purchasing power paritynoun phrase
PUR-chus-ing POW-er PAR-ih-tee
The theory that exchange rates should adjust so that identical goods cost the same in different countries when prices are converted to a common currency. Abbreviated PPP.
"By purchasing power parity, the Chinese yuan is significantly undervalued relative to the dollar."
spot ratenoun phrase
spot rayt
The current exchange rate for immediate settlement — the price you pay right now to buy a currency.
"At the spot rate of 1.25, you pay $1.25 for every British pound today."
forward ratenoun phrase
FOR-werd rayt
An agreed exchange rate for a currency transaction to be settled at a future date — used to eliminate future exchange rate uncertainty.
"The company locked in a forward rate to protect against currency fluctuations on its export contract."
bid-ask spreadnoun phrase
bid-ask spred
The difference between the price a buyer will pay and the price a seller will accept for a currency. Currency exchange companies profit from this gap.
"Airport currency exchange desks charge a wide bid-ask spread — you pay more and receive less than the market rate."
capital flowsnoun phrase
KAP-ih-tul flohz
Money moving between countries for investment, lending, or financial transactions. Large capital flows can move exchange rates significantly.
"Capital flows into emerging markets when US interest rates are low and investors seek higher yields."
hot moneynoun phrase
hot MUN-ee
Short-term capital that moves rapidly between countries seeking the highest returns — destabilizing when it exits suddenly.
"Hot money flooded into Brazil when its interest rates rose to 13%, driving up the real."
currency crisisnoun phrase
KUR-en-see KRY-sis
A sudden, sharp fall in a currency's value, often triggered by loss of investor confidence and accelerated by speculation.
"The 1997 Asian currency crisis saw the Thai baht, Indonesian rupiah, and South Korean won collapse within weeks."
dollarizationnoun
dol-uh-rih-ZAY-shun
The process by which a country adopts the US dollar as its official or de facto currency, abandoning its own.
"Ecuador adopted full dollarization in 2000 after its own currency collapsed."
carry tradenoun phrase
KAIR-ee trayd
Borrowing in a currency with low interest rates and investing those funds in a currency with higher rates, profiting from the difference.
"The yen carry trade collapsed in 2024 when Japan raised interest rates, forcing mass selling of assets globally."
petrocurrencynoun
PET-roh-KUR-en-see
The currency of a country that is a major oil exporter — its value tends to rise and fall with the oil price.
"The ruble, Canadian dollar, and Norwegian krone are often described as petrocurrencies."
dollar hegemonynoun phrase
DOL-er heh-JEM-uh-nee
The dominant global role of the US dollar in international trade, finance, and reserves — giving the US unmatched economic power.
"Dollar hegemony means any country cut off from the dollar system faces serious economic consequences."