How are monetary values ​​determined?

And who determines the monetary values?

The answer to the second part is simple. The value of the coin is determined by the buyers of the coin. These are mainly forex traders, governments and travelers. FOREX is the acronym for Foreign Exchange. There are many factors that currency traders, governments, and businesses take into account when determining the fair market value of a currency.

Fair market value is the price at which a willing buyer and seller join. The buyer must take into account many elements and considerations in trying to accurately assess the value of a coin at any given time. There are currently approximately 180 different currencies in the world. Let’s consider some of the factors that are used to determine the value of a coin.

Factors that affect the value of the coin:

1. Political conditions in the country: this includes the stability of the government, the amount of corruption, bribery and the degree of public order. It also includes a country’s relationships with other countries and especially its relationship with the US, UK, China, and Russia. The form of government of the country is also a factor used to assess the value of a currency. Consider the widely varied forms of government in Saudi Arabia, China, the United Kingdom, Venezuela, and Thailand, just to name a few.

2. Economic situation: this includes factors such as employment, unemployment, work ethic, infrastructure, inflation and the direction of the economy. Do you have an older or newer orientation? computers and high technology, or more agriculture and manufacturing.

3. Perception from the outside – The perceptions and attitudes of other countries towards a country are as important as the reality of the current situation in the country. News, media, movies, newspapers, rumors, and twists can create perceptions. How much is known about a country? The less that is known, in general, the lower the value of a coin.

4. Demographics: a young population can mean better prospects for the future, people more open to change and development, and a growing size of the workforce. The general population of a country is a factor. How much weight does this country have on the world scene?

5. National leaders: the openness, trustworthiness and sympathy of visible leaders is a factor. This includes political leaders, sports figures, business owners, and celebrities. Here are some national figures that affect your countries, either for better or for worse. Kim Jung Il, David Beckham, Nicole Kidman, Madonna, Osama bin Laden, Barack Obama and Vladimir Putin. These help shape the global perception of a country.

6. Isolation versus openness – Continuum China is becoming more open, more transparent. This helps. Cuba is very closed and isolated. Venezuela is increasingly isolated by some of its recent actions. China’s markets are becoming more open. Cuba, Kyrgyzstan, Russia, and Japan have different levels of openness to the outside world, which affects the value of their currency.

7. Natural Resources: The type and amount of exploitation of a country’s natural resources certainly helps create a perception of the value, or lack thereof, of a country’s currency. The mining of minerals, forests, oil, fish and other resources is considered. Also the level of technology to develop these resources.

8. Climatic factors such as droughts, tsunamis, earthquakes and floods are taken into consideration. How frequent are they and how is the response of the country? These also affect the desirability, security and perception of a country. Is it a tourist destination?

9. War and conflicts – With what other country is a country at war and who are its allies? Your military strength and technology, your willingness to go to war and what for, are important factors in assessing the strength, stability, and value of your country’s currency.

10. Education: This includes spoken languages, computer literacy level, Internet connection, culture and religion. Scientists, entrepreneurs, authors and inventors are affected by the type and quality of education in a country.

In conclusion, the values ​​of currencies are determined by many factors. Not just one topic should be considered, but a combination of many. In currency trading, as in FOREX, trades are generally done in pairs. The values ​​must be relative to something. So how a country is doing relative to another country is also important. Common currency pairs are the US dollar and the Japanese yen, the euro and the US dollar, for example. These and other factors determine the value of a coin. Some are tangible, others intangible. Some are fixed and some are manageable. Sometimes it is the news of the moment and sometimes the long-term situation. That is why coin values ​​change often and there is no single place or person that determines coin values. And why currency exchange, based on fluctuating currency values, can be an exciting, lucrative, volatile, fun, or disastrous form of business or investment.