Why are currencies have different value?
October 6, 2008 4:53am CST
Is it that when your country is poor, the value of your money compare to other countries is usually small. Any body knows their basis?
8 Dec 08
It all depends on the demand for the currency relatively. If a country is in growth path many would like to invest in the country and they spend money into the stock markets, corporate investments, Real estate etc. When they do such investments they have to convert their currencies to the local currency before spending. So ultimately more demand for the currency of that country increases the value of the money. Hope that simple example helps.
28 Nov 08
oh my, the answer to this question is a bit complex but i'll try to make it as straightforward as i can... if the country in question has a floating exhange rate, that is the Central Bank allows the market to determine the exchange rate, then it is usually determined by supply and demand for that currency relative to other currencies... demand for the local currency is determined by a lot of things, but mainly by how people perceive the domestic economy... if the economy is doing well relative to other countries, then chances are that demand for local currency is high and thus, the exhange rate strenthens or appreciates... but if the economy does not perform well, then investors will shun the local currency and demand foreign currency, say the dollar, leading the domestic currency to depreciate relative to the dollar... happy mylotting! :)