Go back to: General discussion
1) Why countries have currencies with different value to each other?
With the Breeton-Woods summit the gold standard for the value of currencies was removed. After that the value of currencies was determined by economic performance with main indicator GNP or the turnover of goods and services. Since different countries have different economic performance hence and different value of the currency.
2) How does a nation gains and/or lose when the value of their currency fluctuates?
Depreciated currency means that the nation gains from cheaper exports but the inflation rises and imports are expensive.
Overvalued currency means expensive export but also means that the currency is more often used in transactions other than with nation.
3) How can government actions (central banks) affect the value of their currency and why do they do so?
Central Banks can affect the value of the currency with a reserve of stable currencies (don't know its name in English) With intervention by the currency reserve by buying or selling domestic currency its value is changed. Also political decisions can affect the value of a currency. They can boost or decline foreign investment hence the dealings with the currency increase or decrease.
4) How does a currency trader make and lose money?
Currency trader makes money by exploiting fluctuations of the comparative value between two currencies.
Discussing the Questions
1) Why countries have currencies with different value to each other?
With the Breeton-Woods summit the gold standard for the value of currencies was removed. After that the value of currencies was determined by economic performance with main indicator GNP or the turnover of goods and services. Since different countries have different economic performance hence and different value of the currency.
2) How does a nation gains and/or lose when the value of their currency fluctuates?
Depreciated currency means that the nation gains from cheaper exports but the inflation rises and imports are expensive.
Overvalued currency means expensive export but also means that the currency is more often used in transactions other than with nation.
3) How can government actions (central banks) affect the value of their currency and why do they do so?
Central Banks can affect the value of the currency with a reserve of stable currencies (don't know its name in English) With intervention by the currency reserve by buying or selling domestic currency its value is changed. Also political decisions can affect the value of a currency. They can boost or decline foreign investment hence the dealings with the currency increase or decrease.
4) How does a currency trader make and lose money?
Currency trader makes money by exploiting fluctuations of the comparative value between two currencies.