Euro exchange rates refer to the various rates that are computed when any currency is compared to Euro. Euro manipulates, and is manipulated by its performance in macroeconomics and balance of payments. Since Euro is the second most important international currency, the movements of Euro exchange rates exercise a lot of pressure on international economics.

The market exchange rate of Euroland is the rate determined by various transactions in the Forex market. Forex spot market transactions take immediate effect, while forward market transactions take about 3 to 6 months’ time to take effect. The ratio- forward price : spot price shows the expectation of the market towards depreciation or appreciation of Euro.

The effective rate of Eurozone is the average value of exchange rates of all the countries with which they trade. The currencies are multiplied by a number, which is its weight as determined by its relative significance in Eurozone’s trade. The Bank of England publishes monthly indexes of effectual exchange rates of Euro, US dollar, and Pound Sterling.

The rise in effectual exchange rate of any currency generally indicates that its international competitiveness is reduced.

The PPP, or Purchasing Power Parity is another exchange rate that should be taken into account while conversion. It is defined as the total currency unites needed to purchase goods corresponding to those that can be purchased with another currency. For example, if you want to compare Euro and Dollar, you must consider the amount of goods that can be bought for the same number of Dollars and Euros. These rates are very important when international comparisons are to be made- generally to find GDPs (Gross Domestic Products) of various countries. There are many global organizations that offer PPP indexes to its member counties. They use a calculative method (as discussed in OECD stats brief). Then the OECD publishes the resultant indexes.

There are various types of exchange rates: fixed, floating, and hybrid.

Though not followed extensively, the fixed exchange rate system fixed each currency for a certain value against the US Dollar. Floating exchange rates mean that the exchange rates depend upon international transactions, and the hybrid ones include the benefits from both fixed and floating.

If you want to compare GDPs of various countries, you must use PPP exchange rate. Euro is a strong currency, and there are various kinds of exchange rates. Fixed exchange is not largely followed these days and is replaced by floating rate