An exchange rate is the value of currency pairs – one nation's currency cost is presented in another nation's currency. Exchange rates change every day, and for anyone traveling or working abroad, the exchange rate can have a significant impact on living expenses and budget. There are two broad categories of exchange rates: floating (or flexible) and fixed.

The national government sets a fixed exchange rate, and a foreign exchange market (Forex) determines a floating exchange rate. These markets set and regulate the prices that investors purchase one currency than another.