equilibrium exchange rate

Definition

The exchange rate at which the supply for a currency meets the demand of the same currency. As foreign exchange rates are affected by a number of factors, the equilibrium exchange rate in turn, are also influenced by its supply and demand. Hence equilibrium is achieved when a currency's demand is equal to its supply.

Use this term in a sentence

You should always try and make sure that you are on the right side of the equilibrium exchange rate to save money.

​ Was this Helpful? YES  NO 5 people found this helpful.

The equilibrium exchange rate was not being met so there was an opportunity of arbitrage in the currency trading market.

​ Was this Helpful? YES  NO 2 people found this helpful.

We were studying currency plays and noting the equilibrium exchange rate before we made any hard choices on which markets to enter.

​ Was this Helpful? YES  NO 2 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
equilibrium equilibrium price