Economy & context
An exchange rate is the price of one currency in units of another. Every quote is a pair, so a rise or fall must name which currency strengthened.
Make it click
If one blue token buys more red tokens than before, blue strengthened against red. The same move described from red's side has the opposite sign.
Now put that into markets
FX markets quote bid and ask for currency pairs. Rates respond to policy, inflation, growth, trade, risk appetite and expectations.
Spot, forward and effective exchange rates answer different questions. Interest-rate differences influence forward pricing under market conventions.
State base and quote currency, timestamp, session and nominal or real measure. Decompose investment returns in the investor's home currency.
A strong economy does not guarantee a stronger currency because expectations and relative conditions matter. FX can move sharply without one cause.
Takeaway
