The nominal exchange rate can also be called the two-country exchange rate. It is the price of a currency based on another currency, which can be expressed as the foreign currency price of the domestic currency or the domestic currency price of the foreign currency. The nominal exchange rate can usually be found in newspapers and usually has a spread between the buying price and the selling price. It is the currency exchange ratio in reality, which may be determined by the market or set by the official.

The nominal exchange rate refers to the exchange rate that is directly announced and used in social and economic life to express the parity relationship between the currencies of two countries. It is the price of one currency relative to another currency. There are many factors that affect changes in nominal exchange rates, including the relative price levels, relative interest rates and trade balance between the two countries. Under certain assumptions, these factors can independently determine the nominal exchange rate between two countries, and this has given rise to exchange rate determination theories such as purchasing power parity, interest rate parity, and the balance of payments theory.