I spend a great deal of my time out of the USA. My question is: why is the "euro" exchanged at a much higher rate then the"dollar"?
2007-01-03 20:53:48 · 4 answers · asked by manao 1 in Business & Finance ➔ Other - Business & Finance
a complete explanation would mean a course in economics. since neither currency is backed by gold or the like, it is really all perception. they trade them, and it goes back and forth. that part of it is supply and demand, mostly, with a bunch of speculators in the mix, if they think the value of Euros will go up, they start buying them, sure enough, if enough of them start buying them, the perceived value goes up. at some point they quit buying them, and the value goes down until they start buying them again. In reality, it's just nuts, like the prices of stock having little or nothing to do with how good a company is or what they do.
2007-01-03 20:59:38 · answer #1 · answered by tootall1121 7 · 0⤊ 0⤋
Supply and demand. The currency markets are like any other market. If more people want Euros more then Dollars then Euros will have a higher value. Central banks can control it to some extent by selling reserve funds into the money market but that only lasts so long. There are a host of other factors but this is the quick answer.
2007-01-04 04:59:39 · answer #2 · answered by Michael 3 · 0⤊ 0⤋
Because the Euro has a different value. It buys a different amount of goods, it has a different profile in monetary past monitary policies, the countries that trade in the Euro have a different investment reputation than the United states, the value is also affected by the total number of Euros and dollars in circulation.
2007-01-04 05:05:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I spent most of my life outside USA(except few days). My question to you is why should be the exchange rate of "dollar" higher than the one of "euro"? Is there a rule for this?
It's related to economy and not only.
2007-01-04 05:00:32 · answer #4 · answered by abcristi 2 · 1⤊ 0⤋