And who determines the currency's value?
The answer to the second part is simple. Currency values are determined by the currency's buyers. They are mainly travelers, government and foreign exchange traders. Forex means foreign exchange. There are many factors that Forex traders, governments, and businesses consider when determining the fair market value of a currency.
Fair market value is the price that a willing buyer and willing seller can bring together. In order to properly evaluate the value of a currency at a given time, the buyer must consider many factors and considerations. There are now about 180 different currencies in the world. Let us consider some of the factors used to determine the value of a currency.
Factors affecting currency quality:
১. The political situation of the country – these include the stability of the government, the amount of corruption, the degree of bribery and law and order. It also includes the relations of one country with other countries, and especially their relations with the United States, the United Kingdom, China and Russia. The formation of government in the country is also a factor used to determine the value of a currency. Consider different forms of government, namely Saudi Arabia, China, United Kingdom, Venezuela and Thailand, to name just a few.
2. Economic conditions – These include things like employment, unemployment, work policies, infrastructure, inflation and the economy, and it is new in terms of orientation or orientation; Computer and high technology, or more farming and manufacturing.
৩. Perception from the outside – other countries' perceptions and attitudes towards one country are just as important as the reality of the real situation in the country. News, media, movies, newspapers, rumors and spin can make sense. How much is known about a country? The less known, usually the lower the value of the currency
৪. Demographics – The future of a young population is likely to improve, people who are more open to change and development and the increasing size of the workforce. One reason is the overall population of a country. How much weight this country has in the world view.
৫. National Leaders – Openness, credibility and choice of visible leaders is a factor. These include political leaders, sports personalities, business owners and celebrities. Here are some national statistics that affect their countries, for better or worse. Kim Jong Il, David Beckham, Nicole Kidman, Madonna, Osama Bin Laden, Barack Obama and Vladimir Putin. They make sense of any country in the world.
Open. Isolation vs. Openness – Continually China is becoming more open, more transparent. It helps Cuba is very closed and isolated. Venezuela is becoming more isolated by some of its recent activities. Chinese markets are becoming more open. Cuba, Kyrgyzstan, Russia and Japan, all have different levels of openness with the outside world, which affects the value of their currency.
Natural. Natural Resources – The type and extent of exploitation of a country's natural resources certainly helps to create the appreciation of a country's currency's value or lack thereof. Minerals, forests, oils, fish and other resources are considered. The level of technology for development in these resources.
৮. Weather factors such as drought, tsunamis, earthquakes and floods are taken into account. How often they are and how the country responds to them. They affect a country's willingness, security and perception. Is this a tourist destination?
9. War and Conflict – Who is a country engaged in war with another country and its allies? Their military strength and technology, their willingness to go to war, and what for, are important factors in determining a country's strength, stability and its currency.
১০. Education – These include spoken language, computer knowledge level, internet connection, culture and religion. Scientists, entrepreneurs, writers and inventors are all influenced by the type and quality of education in a country.
In conclusion, currency values are determined by a number of factors. Not just an issue, but a lot of things to consider. In foreign currencies such as forex, trades are usually made in pairs. Values must be related to something. So how one country is doing compared to another is also important. Common foreign currency pairs are the US Dollar and the Japanese Yen, the Euro and the US Dollar for example. These and other factors determine the value of a currency. Some are fixed, some disappear. Some are fixed and some are manageable. Sometimes it's the news of the moment and sometimes the long-term situation. That is why currency values often change and there is no place or person who can determine the value of the currency. And why currency exchange, based on fluctuating currency values, can be an exciting, lucrative, volatile, fun or catastrophic form of business or investment.