Nominal Exchange Rate

A bilateral exchange rate that is unadjusted for changes in the two nations' price levels.

Consider the bilateral exchange relationship between the United States and the member countries of the European Monetary Union (EMU) between April 2000 and April 2002. During this period the euro declined relative to the dollar. In April 2000, the euro-per-U.S.-dollar exchange rate was 1.058 euro/U.S. Dollar. By April 2002, the euro's value had fallen, and the exchange rat had climbed to 1.123 euro/ U.S. Dollar. Based on the values of these nominal exchange rates, the rate of appreciation of the dollar relative to the euro between April 2000 and April 2002 was equal to 6.71%.
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