The currency rates means that a particular currency is converted at a particular rate at a particular time for the payment or receipt of money to overseas or from overseas. For example if you sell goods worth in US dollars to Australia the Australian importer has to pay in US dollars and Australian dollar has to be converted at a particular rate when the money is paid. This is called a currency rate or exchange rate. The basis of the rate of currency depends on the exchange rate system adopted between two currencies.

The major exchange rate system in the contemporary economic system in the world can be categorized as Fixed exchange rate system and exchange control by the central or Reserve bank or it can be a floating exchage rate system or managed floating exchange rate system. In fixed exchange rate system the currency exchange rate is constant irrespective of the demand and supply of that currency and the central and reserve bank has exchange controls and the free market is highly regulated by the government intervention regarding external transactions that in export and import controls. In a floating exchange rate system the market will determine the exchange rate and the exchange rate vary day to day and within a day and may fluctuate widely depending on the demand and supply of that particular currency. The government do not intervene at all in relation to external trade or investments in and out of the country. This exchange rate system is rare and most economies in the current world economic environment have a managed floating exchange rate system. However very few countries particularly in the third world countries and in some of the Eastern European countries have fixed exchange rate system. The currency rate is determined mostly by the workings of the free market but regulated by government to varying degrees is the norm. That is the currency rates is mostly determined by managed floating exchange rate system.

As in the contemporary economic clymate of a globalist economic system and the free flow of capital is the norm with certain regulation to minimize volatility of currency for the internal stability of the economy the manged float of currency is the principal currency exchange rate system even though some currencies are determined on fixed exchange rate system particularly of the exchange rates of the third world economies currencies. In a world of trade and financial flows and technological advancement and Internet the stability of the international monetary system is vital for the world to have a sound exchange rate system and no exchange rate system ensures its stability and the economies have to work together to resolve imbalances to have a well co-ordinated exchange rate system to determine the rate of exchange rate of world currencies.

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