4.1 Definitions and types of the exchange rate
The exchange rate is simply the price of one currency in terms of another, and there are two methods of expressing it:
1.Domestic currency units per unit of foreign currency—for example, taking the pound sterling as the domestic currency, on 16 August 1997, approximately £0.625 was required to purchase one US dollar.
2.Foreign currency units per unit of the domestic currency—again taking the pound sterling as the domestic currency, on 16 August 1997, approximately $1.60 was required to obtain one pound.