How the currency of a country is measured in term of other country's currency
By 1anurag1
@1anurag1 (3576)
India
November 2, 2009 9:37am CST
i am not sure about this. how a country decides what is the cost of the currency in other country's currency like what is the value of rupees in dollars.
and why this changed frequently.
i have also noticed that it is not a parameter of a big or small economy too.
what you know
1 response
@Simon1223 (903)
• China
2 Nov 09
In my view, it depends on the supply and demand of these two currencies. Take rupee and dollar for example, if people need more rupees, they will exchange dollars for rupees, then rupee will rise in value. Why does exchange rate change frequently? I think the answer is that people make decisions according to the changing situations. For instance, if people are sure that investing in Indian stock market is profitable, they will exchange dollars they have for rupees, then the demand of rupees is increasing while the supplying of dollars is increasing. The outcome is that rupees appreciate against dollars.
