Sunday, December 4, 2011

What determines whether a currency is strong or weak?

I don't know whether a strong currency would be the more things you can buy with 1 unit of that currency i.e. 1 pound. Or is a strong currency, where you can't buy a lot with one unit. I know when inflation occurs it has a particular effect on the strength of a currency but I cannot remember what, if I had to guess it would probably be that it causes the strength of your currency to decrease.|||Genetics and exercise, usually pumping iron|||Mainly the export surplus of the country in question.|||The two economic drivers, demand and supply. would determine the price for your currency. To take the simplist case suppose you goods and services are more liked around the world and you trade these goods and services with money (your own currency) so that the people or other countries who are buying these goods and services needs to exchange their money to your currency so they would be able to buy your goods and services. Now what happens is this the demand for you currency goes up and thus it makes it more valuable and strong.





thought their are plenty other things that affect the price of money such as political condition in a country, interest rates, size and cheapness of exports and imports, quality of exports and imports but again all of these somehow link to DEMAND and SUPPLY.

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