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The video tutorial explains the concept of exchange rates, defining it as the price of one currency in terms of another. It emphasizes that exchange rates involve two currencies and clarifies how to determine the cost of buying one currency using the domestic currency. For instance, to buy a euro, one needs to know how many Australian dollars are required. The video aims to simplify the understanding of exchange rates, which can be confusing due to the dual currency involvement. It discusses two methods of quoting exchange rates: the direct method, denoted by "e," and the indirect method, represented by "s." Understanding these methods is crucial for clarity in currency exchanges.
