Are England exchange rates and import prices based on the Bank of England base/interest rate?

Basically, I just wanted to know how and if import prices and/or exchange rates in England have the Bank of England's base rate anywhere in the calculations?

1 Answer 1


Exchange rates are not calculated from anything. They are based on the price that someone is willing to pay to buy that currency. It's a purely market-driven thing.

Interest rates do have an effect on exchange rates, since high interest rates make a currency more desirable, but it's not based on any kind of formula.

  • Most exchange rates are not calculated from anything. A few places (e.g. China and its yuan) will set an official exchange rate (in China's case, relative to the dollar). This can be enforced either by being willing to buy or sell unlimited quantities of yuan or dollars at that rate on demand, or by putting a bunch of crazy legal limitations on who can use which money for what (though the latter choice typically means that there's a black market in that currency with something like the real exchange rate...)
    – user296
    Commented Feb 18, 2012 at 1:30

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