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The price to exchange one U.S. dollar for one unit of a foreign currency is called an exchange rate. The exchange rate of the U.S. dollar varies for different foreign currencies, which fluctuate daily based on a number of factors.
This article will examine these questions. While the question of the effects of the devaluation of the dollar against other currencies is important, that topic is beyond the scope of this article. The exchange rate between the dollar and the euro is set by supply and demand. That is, the exchange rate âfloatsâ or adjusts to the demand for (and supply of) dollars versus euros.