What Are Foreign Currency Exchange Rates?

Foreign currency exchange rates, which are also sometimes shortened to forex rates, are the values of two currencies relative to one another. Put another way, the amount of one currency that is needed to buy a unit of the other currency.

For simplicity's sake, the foreign exchange rates are expressed usually as the amount of one currency to buy one US dollar, Euro or Yen. The foreign exchange rate for the US dollar and the Japanese Yen is, for example, as USD/JPY at 115, which mean one US dollar buys 115 Japanese Yen.

The order in which these pairings appear depends on where you are in the world. Another way that foreign exchange rates are expressed is in currency pairings between foreign currencies and these values are referred to as "cross rates", for example, EUR/JPY at 155 is the relative values of these two currencies. In this example, one Euro buys 155 Japanese Yen.