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LoginWhy Uk's exchange rate higher than US?
21 posts
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Exchange rate doesn't in itself reflect the economy (even though fluctuations in value generally do in some way) - think about it, Japan has one of the strongest economys in the world but 1 yen is worth f*ck all. in the simplest terms it is simply the value of one currency vs another - for example if the US churned out (simply printed) another million dollars into their economy without taking it out that would be detrimental to the value of the dollar against any other currency who didn't because it is now less valuable, more common in comparison. that's why fake money is such a big issue, if you have more and more of a currency entering the market (without that markets performance matching it of course) that currency quickly loses value.
but you've only just noticed? it's been that way for err... a very long time lol last year it hit $2 to the £ for quite a while which was reasonably impressive. made everything american nice and cheap for us :P
Edited by Jezmeister 20 Feb `08, 2:58PM
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Originally posted by Xcert:
Japanese economy strong?
their trade reserves used to pwn everyone except China, until China's recent rise threw it to 2nd place. but still, it has more reserves than the whole of Eurozone combined, and 9 times ours.
however their economy now is plagued by near-zero growth due to flat wages and lacklustre consumer spending, interest rate also zero until last year became 0.5% (yen rose from 130+ to 105 now cos of that). basically the only currency news there is the movement of carry trades nia.
Edited by ^tamago^ 20 Feb `08, 4:15PM
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Originally posted by Jezmeister:
Exchange rate doesn't in itself reflect the economy (even though fluctuations in value generally do in some way) - think about it, Japan has one of the strongest economys in the world but 1 yen is worth f*ck all. in the simplest terms it is simply the value of one currency vs another - for example if the US churned out (simply printed) another million dollars into their economy without taking it out that would be detrimental to the value of the dollar against any other currency who didn't because it is now less valuable, more common in comparison. that's why fake money is such a big issue, if you have more and more of a currency entering the market (without that markets performance matching it of course) that currency quickly loses value.
but you've only just noticed? it's been that way for err... a very long time lol last year it hit $2 to the £ for quite a while which was reasonably impressive. made everything american nice and cheap for us :P
I think fiction money is a better term. So am I right to say..
A country which is able to incur debt and take it out in terms of tax and inflations strengthen it's own currency since the circulation of that currency is lesser than the other? Thus, if Country A produces 10,000kg worth of goods per/sec and create $20,000 per/sec. Each kg is valuated @ $2 while compared to Country B where only $10,000 is made thus each kg is worth $1. Thus Country B's currency is much more valuable?
IF debt = money, consider the US national debt, wouldn't it by logic that they have more money? Thus with more money in circulation the people are richer compared to Britain where there is lesser money? Is it due to the amount of physical treasure that the UK had plundered during the early days?
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Originally posted by Agenda:
I think fiction money is a better term. So am I right to say..
A country which is able to incur debt and take it out in terms of tax and inflations strengthen it's own currency since the circulation of that currency is lesser than the other? Thus, if Country A produces 10,000kg worth of goods per/sec and create $20,000 per/sec. Each kg is valuated @ $2 while compared to Country B where only $10,000 is made thus each kg is worth $1. Thus Country B's currency is much more valuable?
IF debt = money, consider the US national debt, wouldn't it by logic that they have more money? Thus with more money in circulation the people are richer compared to Britain where there is lesser money? Is it due to the amount of physical treasure that the UK had plundered during the early days?
you almost completely misunderstood what i said... the fake money was just an example of how values can weaken for one, i did point out that the markets are usually far more influential and by that i meant the overall wealth of the nation.
in regards to the amount of a currency present affecting it's value you have to think of the amount of currency in regards to national wealth - if you think of the world having one overall (imaginary for this purpose) currency and each nation has a specific amount of that currency, if one nation has 100 of that currency and another has 50, but the first nation prints 200 of it's own currency to show for that and the other only prints 50 then the second nations currency will be worth more than the first despite it being a poorer nation.
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Originally posted by Vigelic:
why do they still keep using the pound when they have the euro
there's a lot more to the euro than just being a currency. it's wreaked havoc on a large number of the economies it's been introduced to because it's simply impossible to unite so many different economies under one interest rate. it's not simply about ease of use - once again learn from the past. Plus we brits are a proud kind lol we like our Queen (which is what the commonwealth is really about), we like our postal service even though it sucks and we like our pound.
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