<Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> In finance, an exchange rate is the rate at which one currency will be exchanged for another . It is also regarded as the value of one country's currency in relation to another currency . For example, an interbank exchange rate of 114 Japanese yen to the United States dollar means that ¥ 114 will be exchanged for each US $1 or that US $1 will be exchanged for each ¥ 114 . In this case it is said that the price of a dollar in relation to yen is ¥ 114, or equivalently that the price of a yen in relation to dollars is $1 / 114 . </P> <P> Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20: 15 GMT on Sunday until 22: 00 GMT Friday . The spot exchange rate refers to the current exchange rate . The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date . </P> <P> In the retail currency exchange market, different buying and selling rates will be quoted by money dealers . Most trades are to or from the local currency . The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell that currency . The quoted rates will incorporate an allowance for a dealer's margin (or profit) in trading, or else the margin may be recovered in the form of a commission or in some other way . Different rates may also be quoted for cash, a documentary form or electronically . The higher rate on documentary transactions has been justified as compensating for the additional time and cost of clearing the document . On the other hand, cash is available for resale immediately, but brings security, storage, and transportation costs, and the cost of tying up capital in a stock of banknotes (bills). </P>

What determines the exchange rate of a currency