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Showing posts from September, 2019

Why are currency values different from country to country?

Have you ever think about why we have difference in the values of the currencies? Today, in Sri Lanka we can sell 1 USD for about 181 LKR . OMG ! What a huge difference? How this occurs? Have you think about it? Who are responsible for these differences? Let us have a look on it briefly. Let us assume that there are two countries, Country-A and Country-B. Both have 1 kg (1000 g) of Gold (say). Due to their mutually exclusiveness, they may have difference currencies (Currency-A is in Country-A and Currency-B in Country-B). Under the supervision of IMF , initially they print currencies with total value of 1000. The face value of notes shall be differ in both countries but the total face value should be 1000.00 units (Currency-A or Currency-B). That is, Country-A can print 1000 notes with face value 1.00 in each while Country-B can print 2000 notes with face value 0.50 in each. This can differ for country to country. In this case, each country prints currency value 1.00 ...