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There are various ways to measure RER.[10] Thus the real exchange rate is the exchange rate times the relative prices of a market basket of goods in the two countries.

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Any company operating globally must deal in foreign currencies.

It has to pay suppliers in other countries with a currency different from its home country’s currency.

In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, ER, FX rate or Agio) between two currencies 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.[1] For example, an interbank exchange rate of 119 Japanese yen (JPY, ? 119 will be exchanged for each US$1 or that US$1 will be exchanged for each ? In this case it is said that the price of a dollar in relation to yen is ?

Even if a company expects to be paid in its own currency, it must assess the risk that the buyer may not be able to pay the full amount due to currency fluctuations.

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