Exchange rates play a crucial role in the global economy as they determine the value of one currency relative to another. They affect various aspects, including international trade, investment, and tourism. Interpreting exchange rates correctly is essential for businesses, governments, and individuals to make informed decisions. In this article, we will explore what exchange rates are, how to interpret them, and their impact on economies. Exchange rates represent the price at which one currency can be exchanged for another. They are determined by various factors, such as interest rates, inflation, political stability, and market demand. Exchange rates can be classified into two types: fixed and floating. Fixed exchange rates are set by the government or central bank and remain constant over time. On the other hand, floating exchange rates are determined by market forces, with their values fluctuating based on supply and demand dynamics. When interpreting exchange rates, it is crucial to understand the base and quote currencies. The base currency is the currency being evaluated, while the quote currency is the currency against which the base currency is being compared. For example, if the