What defines the strength of a currency and why do some currencies have notes in high denominations?

I was recently in a country where the said currency was 'weak' and they had currency notes as high as 5,000.


How is a currency defined as weak and or strong and what leads to governments having to produce denominations of notes so high?|||the strength is defined by how much is out there in the economy. when ther is a lot of money, it's weak.|||value of any currency depends on various factors such as: 1) National income, 2) Inflation rate, 3) Interest rate, 4) Govt. policies, 5) Expectations about future value of currency.





All these factors combined effect the value of currency.





As far as notes in higher denominations is concerned it depends on inflation rate. If annual inflation run very high such as 100% or 200% obviously the lesser goods and services you can buy with current denominations and you need more and more notes of current denomination to buy the same goods and services.





In short is inflation is high you need more money to buy the same good than earlier.





And when the notes currently available are not worthy enough to buy the goods you need higher denomination that's why central prints notes of higher denomination.|||The real value of any currancy is how much somebody else is willing to pay for it. Money markets are run by speculators who buy and sell currency in the hope of making profits on the fluctuations in value. If these people buy enough of that currency its value increases... when they sell, it falls.


High value bills appear as stated, when the value falls enough, the original amount of curreny becomes worht less and less - which requires more and more of it to buy the same thing. At independance the Indonesian Rupiah was set equal to the Dutch Guilder 1 =1. Currently 1 Euro buys nearly 12,000 Rupiah. Since the Rupiah was considered weak, it devalued horrendously.|||currencies gain strength against each other by how much demand exist to exchange into that currency. For example, if Japan is exporting tons of goods to the US, the buyers in the US are paying with dollars. When the companies in Japan receive the dollars, they have to exchange those dollars into yen to use in Japan. Now, the companies then go to the global currency market to make the exchange. Lets say Company A in Japan is able to receive $1,000 and that they are the only transaction that determines the exchange rate. That company then has to find enough people in the currency market who wants to exchange their yen into the dollars. Let's say the exchange rate is 100 yen to 1 dollar. There has to be at least 100,000 yen that is held by people in the market who wants to exchange them for the dollar. If there is, then there is a balance and the exchange rate remains the same. However, that is not likely the case. If there are only 90,000 yen available for exchange, then by laws of supply and demand, the exchange rate of the yen to the dollar will lower, essentially meaning in is becoming stronger. Demand is for 100,000 yen but the supply is only 90,000 yen. Company A in Japan really wants to get their yen so they settle to exchange $1,000 for 90,000 yen. Now the exchange rate is $1 to 90 yen.





To sum up, the strength between two currencies are determined by the amount of exportation and importation done by both countries. If Country A exports more to Country B than imports, then their currency will get stronger compared to Country B.