The Republic of Croatia was in time of drafting of this thesis in the process of entering the European Monetary Union on which ground the euro is being introduced as the new national currency. The entering process consists of fulfillment of different criteria defined by the Contract of the European Union which are being accepted by every nation upon signature of the entry contract. The entry Contract of the Republic of Croatia into the European Union was signed on the 9th of december 2011 with which the criteria of converting to euro have also been accepted. In the time of fulflilling the criteria, before converting to euro, the question imposes, what are the actual benefits to Croatia by switching to euro? To be able to answer this question, it is needed to analyse the effects of trading the nations currency kuna with other currencies. This trade between two currencies is called foreign exchange rate. The foreign exchange rate presents a very important economic variable in the whole economicall system of each country. This thesis will define the basic terms, state the instruments for regulating the foreign exchange rate in Croatia conducted by the Croatian National Bank, state the effects of foreign exchange rate on the economicall system, on stocks in Croatia, on the kuna currency and state the effects on the balance of goods. The listed effects will be supported by researches of various authors.