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Economic Commentary

A Hitchhiker’s Guide to Understanding Exchange Rates

Each day, more than $1.2 trillion worth of foreign exchange changes hands around the globe, an amount that far exceeds the daily value of world trade. Approximately 83 percent of these transactions involve U.S. dollars, but not all involve U.S. citizens.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Humpage, Owen F. 1998. “A Hitchhiker’s Guide to Understanding Exchange Rates.” Federal Reserve Bank of Cleveland, Economic Commentary 1/1/1998.