Can anyone explain to me why some countries have cheaper currency than other but the economic is better?
537356
Rate determined in the market by the demand for and supply of the currency in question.Any economy is better or worse is a relative measurement.The demand and supply of the currency in turns depends on the export and import of the country.
164817
The role and function of the money in europe is no different then then the role and function of money elsewhere in the world. Its not because there are differnet currencies that the purpose of it is different. Ofcourse the value of it may vary to differnt standards of living.\nRoles of banks, and other financial facilities are the same as everywhere else in the world.
452917
Its pure supply and demand... or at least in principle. If all countries had an open economy, where their currencies where in a floating rate, instead of a fixed rate, supply and demand for that currency would determine its price. Lets say, mexican peso vs dollar. If today the exchange rate is $11.09 pesos for dollar and in the course of the day, international investors come and inyect more dollars to the mexican economy (stock market, funds, etc.), and that is greater than the amount of dollars that go out of the country, then people are demanding more pesos than dollars in that specific day. To put your money on mexican market, you have to do it in pesos, so what happens to your dollars? They are transformed to pesos... making the demand for peso higher than that for dollar. Exchange rate should go down... say $11.01. What determines this? Many factors. The stock market in Mexico has been booming for 2 years, so in 2005, the peso aprreciated against the dollar by almost 7%. But with the Feds moving intreset rates up, money is going to the US since it is less risky and the rates are going up, while in México rates are going down. So this year, dollar has gained value against the peso. \nSystematic error determines where the money goes, and who ever gets more of it would have its currency in better value.
870729
Depends on the business I guess. Your second question affects the first. So I'll try to answer that first. An increase in interest rates usually drives up the value (strength) of the currency. The higher the interest rate, the more foreign money and banks themselves invest in that currency driving up its value due to supply and demand laws.\nIf they are an exporter, then that is bad news as it becomes dearer for customers abroad to buy their goods and so they lose business. For importers the opposite applies it being cheaper for customers here to buy imported goods due to the strength of the currency which buys you more(more bang foryour buck).\nRemember though that if, as most companies have to, that they have to borrow money to invest, then higher rates are obviously a disincentive. However higher rates keep down inflation which is of course is a good thing. You are right to be confused as there is no single, easy solution.Otherwise governments would just keep raising rates or freezing them. Like all markets,balance must be maintained.
298640
All currency is backed by gold or silver, if you produce more currency then you have gold to back it up with, you can collapse an economy by lowering the value of their currency to the point where they are bankrupt.Suppose you have 20 pounds of gold and you issue enough currency to cover what the gold is worth, now someone comes along and makes more currency to distribute, if everyone were to cash in ( which isn't physically possible, but in theory it can happen) you would have no way of giving everyone the gold for their currency. Now multiply this by 1000's and 1000's and you'll see how it can cripple a countrys economy.
403181
It limits competition. Meaning people might have to pay more for less, because another country make the cheaper and better version of the product. Although it is used to help support the domestic economy.
294557
Generally, low developing countries are poor ... not just the people, but the government itself. And for the government to meet its obligations, it often simply makes more money -- but this additional currency leads to the devaluation of the existing currency and leads to inflation.
1099197
A currency falls in value because investors lose faith in it as a currency.  Free trade benefits the exporters, not the importers.  Germany and Japan are big exporters to the United States. We export food and guns, they export cars.  Who do you think buys what more?
460205
You can get a much better used domestic for the money than you can for an import. THis is due to the fact that most people will go for the used import (even though imports DO break down just as much as domestics) so there prices are usually higher.
377248
Tourists comprise a very small amount of the Foreign Exchange market.  Shifts in tourist patterns have much less effect on currency prices than demand by institutional traders.  Interest rates, fiscal deficits, trade deficits, and the strength of the economy that issues the currency tend to be the factors affect currency values most (for those currencies that are allowed to float)
1025176
The exchange rate is critical to a country's economic stability.  Significant fluctuations can cause a panic and the country won't be able to pay its bills.  For example, country Y owes country X one billion dollars.  If the value of the dollar goes from 1 Euro to 2 Euros, country Y would still have to pay the billion dollars, but it would actually cost country Y two billion to make the payment.  As for the IMF, if it's the lender of last resort, then duh -- yes it's important to the desperate country which may need the money to buy food for its people because it had a bad harvest due to weather, insects or war.
434243
When a government prints more money and puts it into the system, it causes HYPO inflation, and then instead of needing 3 dollars for a gallon of gas, you will need 30,000 dollars.  It causes way too much problem.  You do not want that to happen, no jobs, not work and not trillion of dollars to buy it with.  \n\nNo other country would trade with such a country and eventually that country would fall into depression and total collapse.
416789
A countries rate of exchange can change for numerous reasons but one topical reason could be the threat of 'terror'. Currency fluctuation work on the supply & demand theory. If no one is demanding (wants it) the currency, then the price will drop. This in turn means that if there is anything negative floating around about a country, then it is very likely that fewer people will want their currency (business & toursism - busniess is the greaterst consumer of international currency). Think of a country as a business and this makes more sense - a business with a lot of bad press or with a level of uncertainty will attract fewer customers/sales.\n\nMany countries still use the US Dollar as the international media of exchange but increasingly this depandance is being reduced as traders/business/Coutries increase their use of the Euro. This is having a real effect on the US economy and a reason that Mr Bush isn't a huge fan of Europe and it's enlargement.
624624
Most currencies are floating. That means it is like the stock market. If the economy is good one day, the dollar is stronger. If unemployment rises, it may get weaker. It is all about supply and demand. It is constantly changing.
770677
Because that's called inflation.\nYou would have more money but you also would\nhave to pay more.
338778
more currency = higher prices
958300
of course you pay better wages.. is the pound not stronger than the euro? but mostly, it's because they know the politicians are far too spineless to kick them out or tell them they can't come in. You see if they did, someone might criticize them.