Lecture 11 Foreign Exchange Market. Foreign Exchange Rate : It is the price of one currency in terms of another currency. For example, if the exchange rate of taka in terms of US dollar is 80 taka then it implies that $1 is equivalent to 80 taka or we need 80 taka to buy $1. .
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Devaluation: The govt. can reduce the value ( devalue ) of the local currency so that a unit of the domestic currency can buy fewer units of foreign currencies than before.
Revaluation: The govt. can increase the value of the local currency so that a unit of the domestic currency can buy more units of foreign currencies than before.