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Exchange Rates – An Example
The table above reproduces foreign exchange rates from November 4, 2007. The table is typical of how exchange rates are often displayed. For each currency pairing, both rates are displayed. The way to read this table is to first decide which currency you are buying and which you selling (paying with). Let’s suppose you have US dollars and want to buy some Euros. Select the line for US $ (the yellow highlighted line), then go across to the column for Euros. The rate given there (in bold in this example), tells you how many Euros you will get for each US dollar.
Suppose you want to go the other way – that is, suppose instead of converting US dollars into Euros, you want to convert Euros into dollars. In other words you want to buy dollars and sell Euros. Then select the “1 Euro =” line (highlighted in blue) and go across to the US $ column. That is the USD per Euro rate. Of course these two rates are reciprocals of each other (go ahead and calculate it just to make sure!).
If the rates on any particular line are trending downward over time, then that currency is weakening or depreciating. Suppose rates in the top line (the US dollar) kept getting smaller over time (as they have during 2007), then the US dollar is getting weaker. Of course a weaker dollar means that the numbers in the US dollar column above are getting bigger.
For more up-to-date rates, see http://www.x-rates.com/ for rates updated daily. See Yahoo finance for up-to-the-minute rates.