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Exchange Rate

Trading Term

An exchange rate is the price at which one currency can be exchanged for another. It tells you how much of one currency you need to get a certain amount of another currency. Exchange rates are determined by various factors such as supply and demand, interest rates, inflation, and economic conditions of the countries involved.

For example, if the exchange rate between the U.S. Dollar (USD) and the Euro (EUR) is 1 USD = 0.85 EUR, it means that for every 1 U.S. Dollar, you would receive 0.85 Euros.

Exchange rates can either be fixed (set by governments) or floating (determined by market forces).

IBKR uses the midpoint of the bid/ask for currency pair exchange rates as reported by Reuters just prior to 4:00 PM ET. These rates can be viewed in the Base Currency Exchange Rate section of daily Activity Statements, which are accessible through the Client Portal under Performance & Reports > Statements. The statements show the date/time, from currency, to currency, and the applicable exchange rate for the reporting period.

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