Eli5 Why do some countries measure their currencies in large units?

Question

For example in Vietnam, lunch can be bought for 50,000 VD and in South Korea, apartments can cost several MILLION Won. Why do some countries use such large denominations?

In: Economics

Answer 1

There are actually two reasons. Like what everyone else said here, inflation is often the reason you see lower or higher exchange rates. The other reason is because some currencies aren’t measured in fractions like USD. For example, one Japanese Yen is equivalent (hypothetically, not the actual exchange rate) to $0.01 USD, or 1 cent, but the Yen doesn’t have the equivalent of $0.01. It is similar to measuring everything in cents. If you were buying a house, it would be similar to saying 20 million cents instead of $200k.