Exchange rates determine the value of a particular country's currency when it is used in another country, or in trade agreements between nations. Exchange rates are influenced by many different factors, including trade agreements, stock prices, trade volumes, and the stability of the country in which the currency originated.
Exchange rates determine everything from a country's investment potential to the spending power of its currency when used in another country. They help individuals establish how much their currency is worth in trading, and what profits they can expect when investing in another country. Exchange rates are also a major factor in determining the economic power a country holds in the world market.