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GCSE Business · key term
The price of one currency expressed in terms of another currency.
Used by AQA and Edexcel
Paper 1, Paper 2
Revise: Exchange RatesAn exchange rate is the price of one currency expressed in terms of another. For example, £1 = €1.18 means that one pound is worth 1.18 euros. Businesses trading internationally need to consider exchange rates because their suppliers or customers may use a different currency.
Specification 1.5.4 · Paper 1
The value of one currency expressed in terms of another currency.
AQA will not ask you to calculate exchange rate conversions. Focus on explaining the effects on business sales and profit.
Build a chain of reasoning: exchange rate change → import cost or overseas selling price → business response → effect on sales and profit.
For exchange rates, identify whether the business imports, exports or does both before explaining the effect.
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An exchange rate is the value of one currency in terms of another. Even a small UK business can be affected: it might import ingredients or equipment, or sell products to overseas customers.