Full Explanation
An exchange rate is the value of one currency in terms of another. For example, if 1 USD = 80 INR, that is the exchange rate between US Dollar and Indian Rupee. Exchange rates are constantly changing based on market forces. They can be fixed (government-set) or floating (market-determined). The exchange rate determines how much foreign currency you receive for your home currency in a transaction.
Frequently Asked Questions
Spot rate is the current rate for immediate delivery. Forward rate is agreed today for future delivery.
Yes, for international transfers you can lock the rate at the time of booking.
For floating currencies, markets determine rates through supply/demand. Central banks influence through policy.
Mid-market rate (real rate) is best. Any markup is cost to you. Real rates have zero markup.