how does the value for dollars was fixed compared to the indian rupee ? why does it fluctuates?

Answer 1

Some governments fix the price of currencies, others let the currency markets do that, and still others have a combination. When I went to Bulgaria a while back, my American dollars were at one price at the airport and another at a currency booth near where I was staying on the other side of Sofia. At one, a dollar would buy about 1.8 Lev, at the other it would buy 1.6 Lev when I left, when I arrived both would give me over 2 Lev per dollar. When I went to England, nobody wanted my leftover Lev. The price of the dollar had dropped in relation to the Euro and that relationship, plus the apparent volume of traffic in dollars for Lev (as in "they saw me coming" because they didn't trade many dollars).

Relative currency values fluctuate based on supply and demand. If the one currency is in demand (Euro, for instance) then the other currencies exchange for less (as in the case of Lev at Heathrow airport, I couldn't give it away).

If a country buys a lot from other countries, then their currency becomes too common in the other lands--its relative value drops. If a country sells a lot to other countries, then the value of the currency of their trading partner becomes becomes more common--its relative value likewise changes.

If a currency from a disinterested/uninteresting country, then its value is depressed to the extent of accomodation. Are there a lot of dollars in places in India that get a lot of dollars compared to those that get few? Sometimes the exchange rates fluctuate because of distance, which could be across the country or across town. It finds a level based on value and convenience until something changes.

Answer 2

the dollar is definatley stronger n it fluctuates because most currencies change. this is due to the import and export of goods between countries