How does the value of currency change??and from where does money originate???

Question

How does the value of currency change??and from where does money originate???

Answer 1

Money in the 21st century originates at the Central Bank. We in the US call it the Federal Reserve. They create all US dollars that exist in the economy.

Its value is determined by the market and the economy. If the economy is doing good, the market will value the currency accordingly.

Answer 2

You asked an answer that is the stem of study for currency traders and economists.

To give a brief and general answer, the value of currency changes in relation to other currencies.  For instance, the Euro's value rose against the dollar's value on a ratio of costing $1.60 US to buy 1 Euro.

In the market's eyes, currency is much like anything else. Like apples, if people no longer demand the currency, then the prices will be devalued. Inflation devalues the dollar.  If the interest rates in the US (or any country) go up, the desire for foreign investors to invest in bonds goes up, and the desire for foreign investors to buy the US dollar would go up. That in turn gives more value to the dollar, and the Euro's value, or any other country's currency's value would drop against the dollar.

Another huge factor for currency valuation is the demand for goods or services in a country. This is a current problem with the United States and China; We are buying billions of dollars worth of China's exports, and they are sitting on billions of US dollars that they could care less about, since they dont want that many goods from the United States. Instead, they are just reinvesting that money into United States securities, and we're in turn incurring a massive debt with China.

--As for your second question, money originates in the Bureau of Engraving and Printing, where millions of fresh dollars are printed daily. On the flipside, millions of old, torn and worn dollars are being shredded, so only a few more million dollars are printed than shredded in a day.

Dollars are no longer backed by the gold standard as they once were, but they are instead backed by the full faith of the United States government.

Answer 3

the value of currency changes based on the strength of the underlying country and government.

when one is more prosperous than another, (for example: US and Britain) then the currency will show you - how many dollars to purchase a pound, etc.

in addition, if the country were to print too many dollars (or whichever) then the currency would be so plentiful that it would lose value. in other words, if there was so much that everyone could just have it then what good is it for buying things?

lately the us can buy fewer and fewer of some other nation's currency for one dollar.

hope that helps