What is the formula used to work out the value of a countries currency?

Question

What is the formula used to work out the value of a countries currency?

Answer 1

Assuming you are referring to exchange rates, like someone else mentioned currency exchange rates are extremely dynamic. This concept is the very foundation of making money in the Forex market.

The link in the post above me here goes to a good site. Just to give ya some more here's a Google link that will give you a good list of sites to check out.

http://www.google.com/search?hl=en&sa=X&...

As for the exact math involved, that's beyond me. Because it constantly changes, I always refer to an online real-time site.

Also, if you didn't know about it- do a search on Forex. Since it deals with currency exchange rates- most of those sites will have enough information to make your head spin.

http://www.google.com/search?hl=en&q=for...

Best Luck

Austin

Answer 2

As against other currencies, it's the open market.

Answer 3

www.gold-eagle.com/gold_digest_03/shosta...

How are currency exchange rates determined?

Dr Shostak asserts that it is 'purchasing power parity' and not the balance of trade that determines currency exchange rates. Using a simplistic example, this means that if 1kg of potatoes can be purchased with 1 US dollar in the US and 2 euros in Europe then US$1 is equivalent to 2 euros, that is, the US$/euro rate should be 2. In this example it would certainly be possible for the exchange rate to move a considerable distance from 2 in either direction, but it would eventually move back to purchasing power parity (2 euros = 1 dollar).

Answer 4

The market determines what each countries currency is worth on a day by day basis. It's very complicated and includes many factors, but it is learnable.

If you are seeking the formula itself for this computation, use this link to learn how.

Foreign Currency Trading - Understanding The Rates

http://www.candlestickforum.com/PPF/Para...

Good luck! ♥ ∞