The price of one currency expressed in terms of another currency. For example, if the U.S. dollar buys 1.20 Canadian dollars, the exchange rate is 1.2 to 1. Changes in exchange rates have significant effects on the profits of multinational corporations. Exchange rate changes also affect the value of foreign investments held by individual investors. For a U.S. investor owning Japanese securities, a strengthening of the U.S. dollar relative to the yen tends to reduce the value of the Japanese securities because the yen value of the securities is worth fewer dollars. Also called foreign exchange rate. See also devaluation, fixed exchange rate, floating exchange rate, foreign exchange risk.