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Economy question

by opportunist86
6 replies
I don't know if its the right place to ask economy related questions. But as there are mind warriors in here, I guess my questions will get better answers.
My question is that why US$1 equals to more than 100 units of Japan currency and same US$1 equals to almost one euro? Does it mean that Euro is stronger than $? I need to know what helps determining a currency's value? Does the value of currency have to do anything with economy?
#economy #question
  • Profile picture of the author Odahh
    the answer is central bankers print money or lower the money supply in order to keep it a certain levels in relation to other currencies .. so that it either goves that contry an advantage or at least keeps it on par ..

    i believe pegging is when a country manipulates it's currency to keep it's value the same all of the time in relation to the value of another country ..

    * a post like this will usually get a you tube listing of zeitgeist or the comming downfall of fiat currencies
    ..so i just gave the basic info on the state of the money supply *
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    • Profile picture of the author joefizz
      Hi Opportunist86,

      There are many factors that affect exchange rates between countries...you could easy write an essay on it.

      Odahh, is right, but it also comes down to the money markets. In the past, the US was in trouble, so traders went to the Euro. As the Euro Zone now struggles, they have moved to other currencies like the Swiss Franc.

      That means Central Banks (supported by their Government's Monetary Policies) support either their own or indeed other currencies. That involves buying and selling currencies. If a currency is being bought heavily, then its price will increase as its in high demand.

      Since 2007, we have truly seen some dramatic times!!! I wonder if they will ever be seen again...

      Hope that has helped?

      Llwyddiant!

      Joe
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      • Profile picture of the author opportunist86
        Originally Posted by joefizz View Post

        Hi Opportunist86,

        There are many factors that affect exchange rates between countries...you could easy write an essay on it.

        Odahh, is right, but it also comes down to the money markets. In the past, the US was in trouble, so traders went to the Euro. As the Euro Zone now struggles, they have moved to other currencies like the Swiss Franc.

        That means Central Banks (supported by their Government's Monetary Policies) support either their own or indeed other currencies. That involves buying and selling currencies. If a currency is being bought heavily, then its price will increase as its in high demand.

        Since 2007, we have truly seen some dramatic times!!! I wonder if they will ever be seen again...

        Hope that has helped?

        Llwyddiant!

        Joe
        THanks for your answer!
        But what about Kuwaiti Dinar? Why is it so expensive? I guess it is neither sold nor purchased at a large level in the international market. Does it have to do anything with strength of economy? I think its not but I'm not able to understand it clearly.
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        • Profile picture of the author joefizz
          Hi again

          It is traded and being one of the strongest (richest) middle east countries, it provides stability to traders.

          Investors will to reduce their risk, hence they invest in stronger economies....thus explaining the strong demand and higher price. Are you familiar with demand and supply?

          Apologies, I am not familiar with the economies of the middle east so can't advise specifically...

          ...but hope that helps anyway?

          Llwyddiant!

          Joe
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  • Profile picture of the author Odahh
    Kuwait probably does all it's big transactions in us dollars .. the dinar is most likely for the people to use amongst themselves .. oil is their main export i believe and that tends to all be in USd$
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  • Profile picture of the author leningovea
    Very interesting posts here... As I see it, the foreign exchange market gives "fair" prices to international currencies based upon three factors: Political conditions, Economic, and Market psychology.

    I think that the traders perceptions affect the most to the exchange rates... Is not about how strong a currency is, but how strong it is perceived.

    Hope it helps

    Lenin
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