Why is the British currency always worth more than other countries?

Question

Yet the British are always complaining about the state of the UK economy.

Is it because the British dictate the world's economy?

Is there any country where the currency is worth more than the pound?

Answer 1

Hum, just to lift a bit of confusion, the Pound is indeed a "strong" currency, but not half as strong as the Euro or the US Dollar.

I think you're confusing the nominal value of the Pound (which is indeed high), or its exchange rate, with its "strength".

My point is that what matters isn't this exchange rate, but what you can buy with your currency, and what's the evolution of this exchange rate.

Today a Pound is worth 1.4781 Euros, but you you have 1000 Pounds and I have 1600 Euros, I'm richer than you, and Bill Gates is richer than us because he has billions of USD.
Indeed, if the evolution of those currency make that the USD get depreciated (you get less Pounds for the same amount of USD), then Bill will be relatively poorer if the wealth don't change.
Only in the meantime Bill could have gotten a lot more of the USD, and then be even richer than us.

Answer 2

There are some currencies that are worth more than the pound - e.g. 1 Maltese Lira is worth £1.58.

You have a good point though. The pound is one of the strongest currencies in the world and is worth more than most. This is not because the UK dictates the world economy in the present day, however. The pound has been historically stronger than most other currencies since the days of the British Empire, when the UK really did dictate the worlds economy.

In recent years currencies around the world have become weaker due to a multitude of factors in the global economy. The long period of economic stability which the UK economy has experienced as a result of the chancellor Gordon Brown's prudent financial management, on the other hand, has only served to further strengthen the position of the pound, whose value currently sits at £1 GBP = nearly $1.99 USD.

Answer 3

A currency is just a medium for exchange of goods and services. A currency itself usually has very little value, it is what you can buy with that currency which is important.

You could for example express currency as apples in the UK, and pears in Euroland. Then ask the question why are apples always worth more than pears?

The answer therefore, is that a currency attracts demand by offering goods, and services and by being a currency which is stable and safe in times of difficult economic downturns. (usually more accurately described as political stability)

By restricting supply of a currency, the currency remains strong relative to other currencies.

Over the last 5 years or so, the pound has traded between 1.4 and 1.5 Euros to £1 pretty consistently. It does not look particularly strong compared to the Euro. In fact it looks like it is fairly stable compared to the Euro.

The US dollar on the other hand has been getting weaker and weaker over the last 5 years. This is probably more to do with the UK pegging its currency against the Euro rather than the dollar, and jointly the Euro and Sterling appear to be adopting tight monetary policies. This is different to the USA (in recent times) where a more loose monetary policy appears to have been adopted.

One would expect therefore that the US economy may experience more inflation in the prices of goods and services than the UK and Europe in order to balance out the changes in value of the currencies. Over the long term this may be true, but in the short term there may be some opportunities to get some bargain skiing holidays or whatever takes your fancy!

Answer 4

It isnt really worth more. The exchange rate is usually - but not always - such that 1 pound is equivalent to more than 1 of any other currency. But thats just an accident of history. When new currencies come in to being then they are usually set equivalent to whatever is the nearest big existing currency at one to one or to whatever its predecessor currency was or, in the distant past, equal to a certain amount of gold or silver. Over time prices then rise at different rates in different currencies and the exchange rate should adjust so as to keep the cost of buying things the same in every country. An example: at the moment, £1 = euro1.48 is the exchange rate: then if you actually had 148 euros you should be able to buy the same amount of goods in Europe as you could in the UK with £100. This is called Purchasing Power Parity or PPP. But that doesnt mean that the British currency is 'worth more' than the euro. For that you need to look at deviations from PPP: compare the prices of CDs in shops in France with those in England. If you use the current exchange rate you will find that CDs in France are more expensive. That is a sign that the euro is stronger and 'worth more' as a currency than the pound (dont mix this up with one euro and one pound - thats not the point). Do the same with the US - you'll find that the dollar is weaker than the pound. Really you should use a variety of goods and services to do this but you will generally find that euro is strong and dollar weak relative to pound. These deviations are caused by a lot of things: relative interest rates, investment flows, trade flows, political pressures, etc etc.

By the way, one of your earlier answerers doesnt realise whats recently been happening in financial markets. The pound is once again in increasing demand by central banks as a reserve currency. Its the worlds 3rd most traded currency - ahead of the Yen despite Japan being twice the size of the UK. Dollar and euro are most heavily traded of course,

Answer 5

It is certainly something that they are capable of and certainly something that would not surprise me. It is, perhaps, in the works all ready. I don't know how else to explain the illogical and insane ideals that they come up with. To many disregard alleged rumors of socialism among other things, and discredit based on the word of one - there only words, right? So why can't people actually learn about things and people they elect before casting that ballot. Those who defend and say it isn't so - have they really took the time to analyze this and actually consider it by researching it and learning? I don't think so. Why do they think the dollar has lost value over the years? Regardless of the reasoning, the increase of dollars lower its value. American currency is on its way to being worthless - then what will we do? Hmm, guess we will have to fall under some other countries system to be bailed out, hmmmm.

Answer 6

Currency values is dictated by country's economy; Second, demand and supply also dictates the value of the currency. you may remember the black Wednesday that brought the downfall of Norman Lamont in the late early 90's including the downfall of Conservative rule!

British wingers always complain about everything for nothing! They should travel more to see how other countries are doing!

Britain certainly dictates the world economy; Indeed, Britain dictates virtually everything on this planet. Haven't you noticed that Portuguese police have to seek advice from British police about disappearance of Madeleine; Also, I understand Japanese have asked help to find killers of British citizen in Tokyo; Jamaicans have already asked for British help in solving the death of Pakistan's Cricket coach; Kenyans also asked for the British help;

In short, this world would collapse without the British; Don't you think we should colonise all the countries of the world so that refugees and asylum seekers don't come here!!

Answer 7

it depends what you mean by "worth more" if you mean that the exchange rate FX/GBP is greater than one for most currencies, then yes o n a nominal level.

Suppose I start a country and declared my currency exchange rate to be 10 Pounds per 1 Mycurr. Then 3 months later the exhcnage rate goes to 5 Pounds per 1 Mycurr. My currency is weak, but it is still "woth more" than the GBP.

Strength and worth are relative terms. The Pound is strong against the USD at 2/GBP recently, but the GBP was weak in 2001 when it was at 1.40/GPB. The pound is not strong now if you compare it to the 80s when it was at 2 to 1. it is still at par...

Answer 8

the economy within the uk sucks, but i agree the economy of the £ around the world is much better.

being british i wouldnt say we dictate the worlds economy far from it. Id say we just print less money than most which is a conributor to keeping it in high demand.

The Euro hmmm a good idea but not when the £ has such a global influence.

Ironicly I find that when im abroad no one wants £, eveyone wants euro's or us dollars.

so maybe to the person on the street they are worth more

Answer 9

London, is now the economic and business centre of the world. Every single major company trades through London to reach the global market which does give us a very good advantage.

Answer 10

Do You actually read the financial section of the newspapers? You cannot miss it. Go to Fashion. Then the Gossip Section, and ask for instructions.