Foreign exchange Rate & Exchange Rate               Regimes:

• Foreign Exchange Rate is a price of one country currency in relation to other country currency
• It is the amount of domestic currency that must be paid in order to get a unit of foreign currency.
• As per Purchasing Power Parity theory, the foreign exchange rate is determined by the relative purchasing powers of the two currencies.

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• An exchange rate regime is the system that a country’s monetary authority, generally the central bank-, adopts to establish the exchange rate of its own currency against other currencies.
• Each country is free to adopt the exchange-rate regime that it considers optimal, and will do so using mostly monetary and sometimes even fiscal policies.