I like holding currency in my pockets but understanding the work of the exchange rate is tough job. I googled the question and I’ve been redirected to this website. I found most of the NCERT solutions for class 12 economics but this question and answer wasn’t there.
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The price of one currency in terms of other currency is known as foreign exchange rate. It is the rate at which one unit of a foreign currency is exchanged for domestic currency. It indicates external value (purchasing power) of a currency in terms of other currencies. In other words, it is the price in domestic currency to obtain one unit of foreign currency.
For instance – 1 US Dollar values 74 INR.