Exchange rate is an absolute price of currencies in the foreign exchange market.

Exchange rates play a crucial role in international business finance as they determine the relative value of currencies in the global market. Essentially, an exchange rate represents the price at which one currency can be exchanged for another. This concept is fundamental for businesses engaged in international trade and investment, as it directly impacts the profitability and competitiveness of their operations.

There are several key points to consider when discussing exchange rates in the context of international business finance:

1. Impact on Trade: Exchange rates have a significant impact on the competitiveness of a country's exports and imports. When a country's currency depreciates relative to its trading partners, its exports become cheaper for foreign buyers, leading to an increase ___ ____ ___ ________ ___ __________ ___ __________.
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