The full form of MRE in banking is Market Rate of Exchange.
In the context of banking and finance, the Market Rate of Exchange (MRE) refers to the prevailing exchange rate at which one currency can be exchanged for another in the open market. This rate is determined by supply and demand forces within the foreign exchange (forex) market.
Here's a breakdown:
- Market: This refers to the open financial market where currencies are traded.
- Rate of Exchange: This is the price at which one currency can be bought or sold in terms of another currency. It represents the relative value of the two currencies.
The MRE is constantly fluctuating due to various factors, including:
- Economic indicators (e.g., inflation, GDP growth)
- Interest rate differentials between countries
- Political events and stability
- Market sentiment and speculation
Banks use the MRE as a benchmark for pricing foreign exchange transactions for their customers. They may add a margin or spread to the MRE to account for their own costs and profit.
