What is an exchange rate? What factors determine the exchange rate for the Australian dollar? An exchange rate is the ratio at which a country's currency exchanges for the currency of another country. Exchange rates are typically expressed as the foreign currency equivalent of one unit of domestic currency. The exchange rate between Australia and the United States for example was $A1.00 = $US0. , (as of 2.12.99). The exchange rate is determined by the demand for, and …showed first 75 words of 1163 total…

…showed last 75 words of 1163 total…will hold their Australian dollars, effectively decreasing the supply, and causing the currency to appreciate. As the forces affecting the value of our dollar are more dependent on profit and investment prospects than it is on our basic trade situation, our exchange rate is unstable. This affects the decisions of exporters and importers. From the point of view of our current account, our exchange rate has in some periods been too high and too unstable.