Exchange Rates

Exchange Rate: The price paid for one currency in terms of another

If a business sources products of component materials from abroad, or if they sell to overseas customers then they are influenced by the exchange rates between currencies. 

To convert £ to a foreign currency, multiply by the exchange rate.

To convert a foreign currency to £, divide by the rate.

Imports: goods or services made overseas which importers bring into the country or which UK citizens use overseas, for which payment leaves the country.

Exports: goods or services made in the UK which exporters take away from the country, which foreign citizens usem where payment enters the country.

A strong pound reduces costs for importers.

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