EXCHANGE RATE. – By foreign exchange rate, or simply exchange rate, is meant the price in national currency at which a certain quantity of foreign currency is purchased. The exchange rate thus expresses the relationship between the value of two currencies. The aggregate of variations in this relationship, i.e., the different quotations over time, is called the exchange rate trend or, more succinctly, the exchange rate itself.
The exchange rate can be technically expressed in two ways. When, in a given country, the value of a fixed quantity of foreign currency is calculated against a variable quantity of national currency—this is the system adopted by Italy and most countries—it is said that the country in question gives the uncertain rate; in the opposite case, when a fixed quantity of national currency is compared against a variable quantity of foreign currency, it is said that the country gives the certain rate for the exchange rate. The exchange rate can be established both between the currencies of different countries—manual exchange rate—as well as between a currency and securities representing the currency of other countries—traiectitious exchange rate. In addition to banks, the economic subjects most interested in exchange rate operations are importers and exporters, and since international exchanges of goods and services are essentially regulated by credit instruments such as foreign bills of exchange, checks, telegraphic transfers, letters of credit, etc., it follows that the most significant exchange rate is the traiectitious one.
In the case of foreign credit instruments, the exchange rate is at sight when the instruments themselves are payable at the moment of their presentation, while it is at term or on delivery when payment occurs after a predetermined period of time. Forward exchange rates, which are the subject of particular contracts and quotations, have an important economic function; through them, foreign currency, even though available only in the future, acquires a price already determined at the present moment when it can be bought or sold, thus freeing importers and exporters from the risk of subsequent exchange rate fluctuations.
The exchange rate of a given currency A can be expressed in terms of all other currencies B, C, etc., with which currency A is exchanged. Given the exchange rate of A in terms of B and of A in terms of C, an exchange rate between B and C will also be established. In order to prevent, or to eliminate once established, any divergences between the different exchange rates, arbitrage operations exist. For example, if the exchange rate of A in terms of B allows obtaining a greater quantity of currency B, while the exchange rates between A and C and between B and C remain unchanged, it will be advantageous to purchase currency B with currency A and then convert it into currency C to reacquire currency A. The profit opportunities offered by this maneuver, by increasing the demand for currency B, tend to raise its value and ultimately restore equilibrium to the exchange rate between A and B. Other, simpler or more complex, arbitrage operations are also possible.
The meaning and nature of exchange rate variations differ depending on whether the exchange rate is between gold currencies or between inconvertible paper currencies. In the first case, the exchange rate is in equilibrium when it achieves monetary parity between the given currencies, i.e., when it is such as to make the exchange ratio between them coincide with the ratio between the fine metal content contained in both; it is then said that the exchange rate is at par. Since its quotations depend on the demand and supply of the relevant foreign currency—demand and supply in turn connected to the balance of payments—divergences from parity may occur, with movements of the exchange rate above or below par. Assuming the freedom of international transfer of gold, deviations of the exchange rate from parity cannot exceed the gold points—the limits beyond which it becomes advantageous to ship gold rather than make payments in foreign currency. The width of the two gold points, upper and lower, is determined by the costs of transport and insurance for sending the metal from one country to another, as well as by the loss of interest for the time of transport. Transfers of gold, by acting in a deflationary manner on the price level of the country losing it and in an inflationary manner on the price level of the receiving country, tend to modify the trend of the trade balance and thus remedy the causes of exchange rate disequilibrium.
In the case of the exchange rate between a paper currency with forced circulation and a gold currency, when gold can still be used for international payments, the equilibrium exchange rate is represented by the ratio between the metallic content of the gold currency and the old metallic parity multiplied by the height of the agio.
In recent decades, the exchange rate between inconvertible paper currencies has gained importance, while the possibility of international transfers of gold has ceased. In this case, to define the equilibrium position of the exchange rate, the principle of purchasing power parity has been formulated, according to which the exchange rate is stable only when it is able to guarantee an equal purchasing power of each currency both domestically and abroad. To the causes of exchange rate variation dependent on balance of payments fluctuations, in this case are added the relative shifts in the price levels of the countries concerned.
If the price level in one country M increases fourfold and in another country N merely doubles, the new exchange rate of the currency of M in terms of that of N will be exactly double the previous rate.
However, the purchasing power parity principle has proved far from acceptable either from a scientific or practical standpoint, so that the problem remains open.
The freedom of the foreign exchange market, which was the typical situation until 1914, gradually narrowed for a variety of reasons that often accompanied the causes leading to restrictions on the international movement of goods, people, and capital.
In general, currency operations tend to be reduced to those that meet real needs of the country’s economic life. At times, exporters have been required to surrender all foreign currency earnings to a special agency that pays them at an official, usually rigid and rather low, exchange rate. In other cases, only a percentage of the foreign currency must be surrendered, while the remainder can be freely traded on an open market. Many countries also prohibit the export of monetary instruments and any securities denominated in the national currency to prevent harmful speculation.
In such a complex and delicate matter as currency regulation, direct or indirect control by state authorities is necessary to prevent individual transactions from undermining the country’s economic life or negatively affecting the social well-being of the population. Therefore, regulations issued by the competent authority bind in conscience, unless in specific cases compliance would clearly violate justice and common sense.
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**CAMBISE** (*Kambūgija* in cuneiform documents) — Name of two kings of the Achaemenid dynasty (see). Of the first, nothing is known except that he was the father of Cyrus the Great (see) and king of Anshan in Susiana until 558 BC.
The second was the son and successor of Cyrus on the Persian throne (520–522 BC). After having his brother Bardiya (the Smerdis of Greek writers) killed, he launched an expedition against Egypt, which he easily conquered thanks to the defection of Greek mercenaries who abandoned Egypt’s service for his. His attempts to occupy Carthaginian Libya and Ethiopia, however, proved unsuccessful. Upon learning from Egypt that Gaumata, posing as Smerdis, had been proclaimed king, he set out for Persia; but he was assassinated along the way or, according to Herodotus, died in a chance accident.
His policy toward the Egyptians was initially tolerant, but after the failure of the two mentioned expeditions, it became cruel and disrespectful toward their religion.
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**CAMBODIA**: see **FRENCH INDOCHINA**.
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**CAMBRAI, ARCHDIOCESE OF** — Located on the left bank of the Scheldt, Cambrai was, along with Tournai and Bavay, the capital of the Nervii. Conquered by the Romans, who called it *Cameracum*, it fell to the Franks in 445, then to the Normans, who devastated it in 880. Later incorporated into the county of Hainaut, it became a free commune from 1076. Louis XI occupied it in 1477; thereafter it was part of the Spanish Netherlands. In this city, the famous League of Cambrai was formed in 1508 between Pope Julius II, France, and the Empire against Venice. Several years later, in 1529, the Peace of Cambrai was signed there by Louise of Savoy on behalf of her son Francis I and by Margaret of Austria on behalf of her nephew Charles V. By the Peace of Nijmegen in 1677, Cambrai was definitively annexed to France by Louis XIV.
The first evangelization of this region appears to date to St. Vedast, who around 500 founded a see at Arras, transferred to Cambrai toward the end of the 6th century. In 1093, Arras and Cambrai became separate sees. The diocese of Cambrai then extended as far as Antwerp. Among the six known bishops of Cambrai, eleven are counted as saints and one as blessed. Other notable bishops of the see include Robert of Geneva (Antipope Clement VII during the Western Schism), Fénelon (1695–1715), known as the Swan of Cambrai, Cardinals d’Estrées, de la Trémoille, and Dubois.
With the bull *Super universas* of 12 May 1559, Cambrai was elevated to a metropolitan see with Arras, Tournai, Namur, and St-Omer as suffragans; the Concordat of 1801 reduced it to a simple suffragan of Paris; in 1841 it became a metropolitan see again with Arras as suffragan, to which Lille was added in 1913, along with the arrondissements of Lille, Hazebrouck, and Dunkirk. The city of Cambrai, apart from its ramparts—including the Castle of Selles and the Gate of the Holy Sepulchre (13th–14th centuries)—has preserved few monuments from the past.
The archdiocese is divided into four archpriestrics: Cambrai with deaneries, Douai with seven, Valenciennes with eight, and Avesnes with twelve. The patron saint of the diocese is St. Stephen. It has 873,109 inhabitants.
**CAMBRAI, MARTYRS OF**: see **FRENCH REVOLUTION, Martyrs of the**.
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**CAMBRIDGE, UNIVERSITY OF** — *Camboritum* in Roman times, Cambridge in the Middle Ages was a small village centered around the church of St. Benedict. A center of study later developed there, but it began to flourish only when a number of students from Oxford arrived after lectures were suspended there. In 1225, the Franciscans settled there; in 1226 it had a chancellor recognized by the pope and the king; in 1240 the Dominicans established themselves; later the Carmelites and Augustinians followed. By 1261, the first proctors or rectors appear, along with the standard curriculum of the trivium and quadrivium. At the end of the century, a constitution modeled on those of Oxford and Paris was in place. The university received its charter with privileges including the *ius ubique docendi* from Pope John XXII on 9 June 1318. The head of the university governed it, organized studies, and approved the statutes of the colleges, assisted by two proctors, *borealis* and *australis*, with financial duties. There was also the *magister glomeriae*, an inspector of grammar schools appointed by the archdeacon of Ely, the diocese to which Cambridge belonged.