What determines a countries currency exchange rate?
Answer:
How much each country is inflating their currency. If the US expands their money supply at 5% and the UK expands theirs at 10%, the value of the pound relative to the dollar will fall (more pounds per $US). Interestingly enough, as fiat money (that is, governmental paper that has no value save the "full faith and credit" of some institution) merges with other fiat currencies, the tendency is to inflate more than the most conservative currency. When the German Mark, for example, was converted to the Euro, the Euro was far more inflationary than the German central bank had been for many many years.
If, however, both currencies are on a commodity standard (always defining a dollar, for instance, to be 125 grains of gold) than the exchange rate is fixed. i.e. If a DM was 250 grains of gold, and the $US was 125 grains, the exchange rate would always be $US 2:1 DM.
would it be the stock exchange and the value of our exports and the values of american goods throught out the world and what value they have on a daily basis! it depends on our trading thru-out the world
How much their money is worth.
The value of the exchange rate is a complicated thing. There is no steadfast rule as to what it will be. The major factors are growth of the money supply, growth of GDP, interest earned on deposits, interest earned on investments, and expectations of future monetary policy.
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