Exchange Rates - GCSE Business Definition

Exchange rates refer to the price of one currency in relation to another currency. They determine how much of one currency is needed to exchange for an amount of another currency and are crucial in international trade and finance. For students studying GCSE Business, understanding exchange rates is important because they affect the price of imported materials and exported products. They influence travel costs and impact foreign investment. Exchange rates fluctuate due to economic factors like inflation, interest rates, and market speculation. These changes can have significant effects on a country's economy and business operations.