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Comparing Foreign Currencies to US Dollar

 
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Comparing Foreign Currencies to US Dollar Can't Post
I have been discussing with my friends on how some currencies compare against USD. For example, the Kuwaiti Dinar is the most expensive currency in the world (1 KWD = 3.55 USD = 1.77GBP).

Also, 1 US Dollar = 1.87208 Brazilian Real. However, before Brazil introduced new Real in 1994, you could get a lot more of the old currency for 1 USD. The new Real just divided the old currency by some factor.

So, just because a currency will buy you more dollars than another one doesn't mean that economy of that country is better. It might be true in some cases but doesn't have to be true all the time.

So, my questions is ... since a British Pound is worth more than US Dollar ... what does that say about the British economy compared to the US? Since pound is worth more than dollar there is just less pound to go around to balance it out?

Thanks.


(This post was edited by ME_VT on Sep 20, 2007, 10:19 AM)
ME_VT
New User

Sep 20, 2007, 10:13 AM

Post #1 of 4 (1287 views)

Re: [ME_VT] Comparing Foreign Currencies to US Dollar [In reply to] Can't Post
There's not simple answer to your question. The pound is worth more because of its power, it can buy more goods. However, the change in prices as you see in say the real is due to a perception of supply and demand. When you revaluate or print new money there is an assumption the new money will be more 'trustworthy' than the old currency (or more specifically the new economy generally introduced by a new regime). This new 'optimism' can encourage investors (foreign investors) and thus increase demand for domestic currency. Right now Amierca is tanking because people are opting for other foreign currencies and investments. That will change no doubt.

econmod
Broker / Moderator

Sep 22, 2007, 2:35 PM

Post #2 of 4 (1235 views)

Re: [econmod] Comparing Foreign Currencies to US Dollar [In reply to] Can't Post
Unfortunently....well maybe fortunately, currency that is exchanged today does not have value in and of itself, like a commodity does. And unlike a couple of years ago when currency was backed by a gold standard or just plain "standard" of some sort, currency today is dependent upon the supply of the coinage controlled by that government as well as the perception of worth. The "power" you speak of is all a perception, and the more people believe that perception the more worth and value the currency has.



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“Geography has made us neighbors. History has made us friends. Economics has made us partners, and necessity has made us allies. Those whom God has so joined together, let no man put asunder.”
John Fitzgerald Kennedy


b6zulu
New User


Oct 21, 2007, 9:05 PM

Post #3 of 4 (724 views)

Re: [b6zulu] Comparing Foreign Currencies to US Dollar [In reply to] Can't Post
Technically the American Dollars and many other currencies are in fact backed by a gold standard. When you peg to international currencies then sometimes that indicates you really don't have much other than perception.

econmod
Broker / Moderator

Oct 31, 2007, 8:57 PM

Post #4 of 4 (561 views)

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