The reciprocal relationship between exchange rates means that as one currency strengthens (appreciates) relative to another, the other weakens (depreciates) in relation.
Related terms
Floating exchange rate: A floating exchange rate is when a country's currency value is determined by market forces, such as supply and demand.
Bilateral exchange rate: A bilateral exchange rate refers specifically to the ratio at which two currencies are traded against each other.
Nominal exchange rate: The nominal exchange rate reflects only changes in prices due to inflation and does not take into account differences in purchasing power between countries.