Legal Definitions - par of exchange

Definition: Par of exchange refers to the equal value of a certain amount of one country's currency and the same amount of money from a foreign country that it is being exchanged into.

Example: If the par of exchange between the US dollar and the Euro is 1:1.2, it means that one US dollar is equal to 1.2 Euros. So, if you exchange $100 USD, you will receive €120 EUR in return.

Explanation: The example illustrates the concept of par of exchange by showing how the value of one currency is equivalent to the value of another currency. In this case, the par of exchange between the US dollar and the Euro is 1:1.2, which means that the value of one US dollar is equal to 1.2 Euros. When you exchange $100 USD, you receive €120 EUR in return, which is the equivalent value of the money being exchanged.