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In this video, the tutorial explains how to convert currency using an exchange rate. John wants to convert 15,000 US dollars to Euros, with a given exchange rate of 1 US dollar equal to 0.9 Euros. The conversion process involves creating a fraction where the numerator represents the amount in US dollars and the denominator contains the exchange rate. To cancel out the unit of US dollars, the corresponding unit must be placed appropriately in the fractions. By setting up the fractions correctly, the tutorial guides viewers on how to perform the conversion accurately, leaving the final amount in Euros.