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. ”
“ The equilibrium exchange rate was not being met so there was an opportunity of arbitrage in the currency trading market. ”
“ We were studying currency plays and noting the equilibrium exchange rate before we made any hard choices on which markets to enter. ”
