Either definition is fine; the important thing is to remain consistent. In this book, we
shall adopt the first definition: we shall define the nominal exchange rate as the price of
the domestic currency in terms of foreign currency, and denote it by E. When looking, for
example, at the exchange rate between the United States and the United Kingdom (from
the viewpoint of the United States, so the dollar is the domestic currency), E will denote
the price of a dollar in terms of pounds (so, for example, E was 0.61 in September 2011).
Exchange rates between the dollar and most foreign currencies change every
day—indeed every minute of the day. These changes are called nominal appreciations
or nominal depreciations—appreciations or depreciations for short.