Definition: Exchange rate is the rate at which one country's currency is converted into another country's currency. If foreign currency is regarded as a commodity, then the exchange rate is the price of buying and selling foreign exchange, that is, the price of one currency against another, so it is also called the exchange rate. 2. Pricing method of exchange rate To determine the price comparison between two different currencies, we must first determine which country's currency is the standard. Due to different standards, several different exchange rate pricing methods have emerged. (1) direct reference. Also known as the price payable method. It is based on a certain unit of foreign currency as the standard, converted into the national currency to express its exchange rate. Under the direct quotation system, the amount of foreign currency is fixed, and the fluctuation of exchange rate group is expressed by the change of the relative amount of domestic currency. The decrease in the local currency converted from a certain unit of foreign currency indicates that the exchange rate of foreign currency has decreased, that is, the depreciation of foreign currency or the appreciation of local currency. China and most countries in the world have won direct speech awards. The RMB exchange rate in China is a managed floating exchange rate system based on market supply and demand. The People's Bank of China announces the exchange rate of RMB against major foreign currencies according to the prices formed in the inter-bank foreign exchange market. Indirect pricing method. Also known as accounts receivable pricing method. It is based on a unit's domestic currency and converted into a certain amount of foreign currency to express its exchange rate. Under the indirect pricing method, the amount in local currency is fixed, and the fluctuation of exchange rate group is expressed by the change of relative foreign currency amount. The increase in the number of domestic currency converted into foreign currency in a certain unit indicates that the exchange rate of domestic currency has risen, that is, the appreciation of local currency or the depreciation of foreign currency. On the contrary, a decrease in the amount of domestic currency converted into foreign currency in a given unit indicates a decrease in the exchange rate of domestic currency, that is, the depreciation of local currency or the appreciation of foreign currency. Britain has always adopted indirect pricing method. (2) Direct quotation and indirect pricing methods have opposite meanings to exchange rate fluctuation, so when quoting the exchange rate of a certain currency and explaining its exchange rate fluctuation, it is necessary to specify which pricing method is adopted to avoid confusion. (3) The dollar pricing method, also known as the new york pricing method, refers to the indirect pricing method for foreign currencies in new york's international financial market, except the pound in the direct quotation. The dollar pricing method was formulated by the United States on September 1 2008 1978, and it is a common pricing method in the international financial market at present. 3. Type of exchange rate (1) From the perspective of setting exchange rate: 1, basic exchange rate. Usually, a freely convertible key currency, which is most commonly used in international economic transactions and accounts for the largest proportion of foreign exchange reserves, is chosen as the main target, and the exchange rate is determined by comparing it with the domestic currency. This exchange rate is the base exchange rate. 2. Cross exchange rate. After the basic exchange rate is worked out, the exchange rate of local currency against other foreign currencies can be calculated through the basic exchange rate. The exchange rate thus obtained is the cross exchange rate, also known as the arbitrage exchange rate. (2) From the exchange rate system: 1, fixed exchange rate. That is, the foreign exchange rate is basically fixed, and the fluctuation range of the exchange rate is limited to a very small range. 2. Floating exchange rate. That is, the exchange rate is not fixed, and there is no upper or lower limit of the exchange rate fluctuation range, but it fluctuates freely with the change of supply and demand in the foreign exchange market. (3) From the perspective of buying and selling foreign exchange by banks: 1 The bid price is also called the bid price, which is the price used by foreign exchange banks to buy foreign exchange from customers. Because its customers are mainly exporters, the selling price is often called "import exchange rate". 2. Selling exchange rate, also known as selling price, is the price that foreign exchange banks sell to customers. Because its customers are mainly importers, the selling price is often called "import exchange rate". The buying and selling price depends on the position of the buyer or seller in foreign exchange transactions. The difference between the bid price and the bid price is generally around 1%~5%, which is the fee income of foreign exchange banks. 3. The intermediate exchange rate is the average of buying price and selling price. Newspapers often use the intermediate exchange rate when reporting exchange rate news. (4) From the payment notification method of foreign exchange transactions: 1, wire transfer exchange rate. T/T exchange rate is the exchange rate at which a bank informs its foreign branches or correspondent banks to pay the payee by telegram after selling foreign exchange. T/T is the fastest way of international exchange in international capital transfer. You can pay in a day or two, and banks can't use customers' funds, so the exchange rate of wire transfer is the highest. 2. Remittance exchange rate Remittance exchange rate is the remittance method that informs the transfer payee of the bank where the payment is made by letter after the bank sells the foreign exchange. Because the postal journey takes a long time, banks can use customers' funds during the postal journey, so the exchange rate of letter transfer is lower than that of wire transfer. 3. Standard foreign exchange rate The standard foreign exchange rate means that when a bank sells foreign exchange, it draws a bill of exchange paid by a foreign branch or agent bank and gives it to the remitter, who carries it with him or sends it abroad to withdraw money. Because there is a time interval between selling and paying foreign exchange, banks can occupy customers' funds during this time, so the exchange rate of foreign exchange is generally lower than that of wire transfer. (5) From the delivery period of foreign exchange transactions: 1, the spot exchange rate is also called the spot exchange rate. Refers to the exchange rate used by foreign exchange buyers and sellers for delivery on the day or within two days of the transaction. 2. Forward exchange rate refers to the exchange rate that will be delivered in a certain period of time in the future, and the buyer and the seller sign a contract in advance to reach an agreement. On the delivery date, both parties will deliver the goods according to the predetermined exchange rate and amount. Forward foreign exchange transaction is an appointment transaction, because the time that foreign exchange buyers need to stay in foreign exchange funds in order to avoid foreign exchange risks is different from the current situation. There is a difference between the forward exchange rate and the spot exchange rate, which is called the forward spread. The difference is represented by premium, discount and average price. Premium means that the forward exchange rate is more expensive than the spot exchange rate, discount means that the forward exchange rate is cheaper than the spot exchange rate, and parity means that the two are equal. (6) Judging from the business hours of foreign exchange banks: 1. Opening exchange rate This is the exchange rate used by foreign exchange banks when they start business and conduct foreign exchange transactions on business days. 2. Closing Exchange Rate This is the exchange rate of foreign exchange banks at the end of foreign exchange transactions on a business day. With the development of modern science and technology and the modernization of foreign exchange trading equipment, foreign exchange markets all over the world are integrated. Due to the time difference between major cities and the interaction of exchange rates in major foreign exchange markets, the opening exchange rate of a foreign exchange market is often influenced by the closing exchange rate of the foreign exchange market in the previous time zone. The difference between the opening and closing exchange rates is only a few hours, but there is often a big difference on the day of exchange rate turmoil. The exchange rates of China and other countries are always changing. See: /cn/common/whpj.html for the latest information.