The economy is literally just people passing money around. What causes the value of a currency to decrease?
In: Economics
Nearly every government in the world prints money nearly constantly, although at different rates. This is normal and calculated for and usually very managable. However, a large part of transactions that a country (which prints money) relies on is the power/conversion rate to other currencies. I lived in Argentina when this exact thing was happening. Although the economics are complicated and I don’t pretend to understand them fully, essenitally this is what happened:
5 Argentine Pesos = one US dollar
You want to buy an iPhone? It’ll cost you about 5 times as much in pesos, numerically ofc.
From many motivating factors, from debt, to economic instability, or worldwide events like coronavirus, this rate can go up and down.
Right now, the conversion rate is 68.01 pesos to one US dollar, meaning that in order for the government, or a citizen trying to buy an iPhone, they’ll have to spend or print more money for what used to cost them a fraction less in pesos.
The motivations for instability in the exchange rate are very complicated and not completely understood by anyone. They’re closely tied to how inflation works.
(Take what I said here as a low-level interpretation of how inflation works, I’m speaking anecdotally without any degree or qualification in economics)
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