What depicts currency rates?
January 5, 2010 by Currency Trading Tips
Filed under More Currency Trading Answers
Can you answer ^euphoria^’s question about Currency Trading?:
i was wondering, in developing countries currency rates of foreign currencies keep changing with the country’s economy and the GDP. but usually the US dollar rate remains the same. i know the main reason behind the stable dollar rate is trade. but why are some currencies are very high priced even though they are not very developed? or some currencies are very low rated although they are developed? for eg. Rupee is quite devalued. Sri Lanka, India, Pakistan, Thailand are the countries i can think of right now where Rupee is the currency. i was checking Pakistan’s currency rates chart and i read that Kuwait’s Dinar in Pakistani Rupee was very expensive and the Japanese Yen is very cheap. its confusing, what actually depicts currency rates?
i was wondering, in developing countries currency rates of foreign currencies keep changing with the country’s economy and the GDP. but usually the US dollar rate remains the same. i know the main reason behind the stable dollar rate is trade. but why are some currencies are very high priced even though they are not very developed? or some currencies are very low rated although they are developed? for eg. Rupee is quite devalued. Sri Lanka, India, Pakistan, Thailand are the countries i can think of right now where Rupee is the currency. i was checking Pakistan’s currency rates chart and i read that Kuwait’s Dinar in Pakistani Rupee was very expensive and the Japanese Yen is very cheap. its confusing, what actually depicts currency rates?
PS. I am not a student. i have graduated long ago, i am asking this to clear my economical concepts, it is not some assignment. so a genuine help would be appreciated. thanks 
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Currency Trading Feedback: sorry if i am answering the wrong question, but if you mean the exchange rate, the dollar exchange rate does change, you just don’t notice it changing because you live in the US. let’s say you see in the newspaper that one dollar buys 43 rupees, when yesterday it bought 40, it seems to you that the rupee has become cheaper while the dollar has become more expensive, because you can still go to the corner store and buy a pack of cigarettes for $5.75. However, when someone in India opens the newspaper, it says one rupee now buys 1/43 dollars, when yesterday it bought 1/40, so to them it seems that the dollar has become more expensive while the rupee has stayed the same, because they can still go to the corner store and buy a pack of bidi’s for Rs 50. However, what has happened is the relative price of the two currencies has changed, neither one stays the same. But because currency is traded instantly on a large global market, prices adjust instantly whereas the prices that you see in stores windows, are not, so prices take time to adjust.