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Before explaining its importance lets define what exchange rate means
Exchange rate is simple the price of one country currency expressed in another country currency. In
other word the rate at which one currency can be exchanged for another. For example the exchange
rate between the USA dollar and the Japan yen is us$ 1=104 yen means the rate at which you could
exchange yours dollar for Japanese yen is 1:104 (I.e., for each dollar you exchanges you receive 104
yen).
The figure show that there have been very substantial movements in nominal exchange rates over this
period. And we can concluded that the currency of Korean was appreciated during the year 1989 as
compared from other years and highly depreciated during the year 1998 as compared from other years
and may be there were reasons behind from this.