Why is Pound higher then dollar(USA), and dollar(australia) lower then USA?

Question

What are the basic reasons of this difference in value of currency.US has rare productions its dependent on all world and its currency is lower then many others but yet it rules.

What are the reason?

Answer 1

The real answer is very complex, but I'll try to keep things simple. The valuation of a country's currency has less to do with the amount of goods produced and more to do with the relative strength of that country's overall economy compared to the rest of the world. Even though the US has a significant trade deficit, the US dollar is valued higher than many other countries because much of the world's economy is dependent on the United States. By definition, the trade deficit implies that the US is importing a bunch more than they export. That means countries with high exports (e.g. China) are still directly dependent on the US buying their stuff. Americans can't buy as much of other countries' stuff if the US dollar isn't worth as much. So a low valuation of the American dollar actually hurts certain other countries even more than it hurts the US.

It's a delicate (and nearly incomprehensible) system.

Edit:

The UK abandoned using sterling silver as the standard for the pound in 1816. The US abandoned the gold standard in 1933. The Canadians never used a nickel standard - they used a gold standard which was also abandoned in 1933. Similar case for other countries. They all now use what is called "fiat currency," which means that the currency has worth not because it's backed by a precious metal, but instead is based on the authority of the issuing government. This is why the relative value of different currency fluctuates so often.

Answer 2

One British pound can purchase more goods thanone US dollar can buy. So, one Pound is more valuable than one dollar. Since one Australian dollar buys less goods than one US dollar, one Australian dollar is less valuable than one US dollar.
This means that the and inflation rate determines the exchange value of currencies between two countries. Lower the productivity and higher the inflation, the lower will be the value of a currency in the foreign exchange market. However, in the short run the demand and supply of different currencies for use in transactions in the international market determines whether the currencies value will increse or decrease relative to others. Ultimately the lower is the cost of production, lower the inflation and higher the productivity of a country, the more of that country's product will be demanded internationally and more will be the demand for that currency by foreigners to buy good from that country. If a country's currency is expected to remain strong, international investprs will demand more of that currency for holding their surplus savings. Since different countries are not exactly in the same situation, the currencies of different countries have different valies.

Answer 3

The British Pound is based on the current pricing of Sterling Silver. The USA is based on gold at a value preset by our Government not the fair market value of Gold. The French Franck is Based on something else in value all to getter. The Canadian Dollars is based on Nickle market value and The dollar of Australia is based on another value able metal. As the market values go up and down so does the money value of currency based on fair market value. Were the locked value dollar of the USA stays at the same value no mater what the market value of gold is. Which is normally above the USA set price, so the American dollar does not change it's value, there for everyone excepts it as payment. The Reason the EURO was dreamed up was to set a standard through out Europe. Which will help reduce this head ake for inter national trade some day the USA may join in on this easier system.

Answer 4

I don't understand what you are comparing. You can just say that if 100 pounds is equal to 200 dollars than the dollars is higher. The value is based on what it can buy. Something in the UK may cost 100 pounds and in the US it may cost 200 dollars but they are equal. Most currencies float and and based on what a country imports and exports.

Answer 5

Emotionally-- pretty high maintenance, I need frequent affirmations, I get my feeling hurt easily etc But physically- very low maintenance. I can get ready in a few minutes. I think I look very nice, but it doesn't take much for me to look like this. And I am low maintenance in other ways-- I don't expect an anniversary gift. I have no problem with my husband going out a couple times of week with the guys etc.