Eli5, how can the the Chinese Yuan be cheap when they have a strong economy while Jordanian Dinar is the opposite?
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There are two possible questions you’re asking here, and I’ll try to address both.
1. “Why is one Jordanian Dinar worth more than one Chinese Yuan.” Because denominations of this sort are arbitrary. You can add or subtract zeroes from any currency without fundamentally changing anything. It’s largely a historical accident that some currencies started out “cheap,” meaning you need lots of them to buy a thing; since then, the country’s monetary policy (inflation, deflation, money printing, etc) have affected how much a unit of that money buys at the moment.
2. “Why is the Jordanian Dinar getting stronger relative to the Chinese Yuan?” I don’t know if this is true – it probably is some of the time. The relationship between two fiat currencies like this is based on supply and demand. If suddenly Chinese businessmen want to buy a Jordanian business, they’ll have to sell Yuan to buy Dinar to buy the business, so the Dinar will rise slightly and the Yuan fall slightly; the opposite is true the other way. If the Chinese central bank increases the supply of Yuan (to try to stabilize or grow the Chinese economy), then the Yuan will fall relative to the Dinar if Jordan is doing the same thing, since there are suddenly more Yuan around. Relative rates of economic growth and investor expectation play themselves out this way, as investors buy currencies in expectation. Obviously there are a lot more than these two currencies, so this gets pretty complicated.
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