Ok I went to Portugal in July and the US dollar was worth 0.74 euros.... now I am in an Italian class and my professor says in Italy the euro is worth more than the dollar.... and i'm sitting there like wtf is he talking about? so my question is, does the euro value differ from country to country, even though it's the same currency? or am i wrong? please explain, thank you...
2007-11-03 16:18:09 · 2 answers · asked by Anonymous in Social Science ➔ Economics
If 1 dollar = .74 euros the euro must be more valuable than the dollar, because it would take 1/.74 =$1.35 to get 1 euro.
Exchange rates are determined in international currency markets so are the same everywhere, but the purchasing value of a money can vary between countries and even within a countries. Thst is many things cost more in New York city than Iowa.
2007-11-03 17:15:17 · answer #1 · answered by meg 7 · 1⤊ 0⤋
You are right to be skeptical, but your prof is right.
Transaction costs such as fees and taxes vary from one country to another. Thus, the net all-in exchange rate does vary between countries- even though the nominal exchange rate is the same.
The is particularly true in the retail (vs. institutional) market.
2007-11-03 23:53:39 · answer #2 · answered by Homer J. Simpson 6 · 0⤊ 0⤋