So hypothetically, if an exchange rate is 1:1, then $1 = €1, right? But if the value of the Euro increases, then it would (hypothetically) be 1:2, so $1 = €2, give or take.
So if that’s the case, then would a currency value *lowering* mean it would be converted for more money? IE: if the dollar drops suddenly, potentially with inflation, and is worth a tenth of the euro, then does $1 = €10?
No, you’ve got it the wrong way around.
If the dollar and euro are worth the same, 1:1, $1 buys €1.
If the value of the dollar dropped, and $1 is worth a tenth of a euro, then $1=€0.10. the dollar dropped in value, so you need less euros to get dollars.
If the value of the euro increases, it wouldn’t be $1=€2. It would be $1=€0.50. you would be able to buy less euros with a single dollar.
I think in that last bit you mean $1 = €.10, or ten cents(pents? Not sure if they call it by another name or not).
If you take the 1:1 ratio then increase the value of the euro, each single 1 is worth more than the other, so if the euro is worth two times the dollar, it would be $1=€.50 or €1=$2
Doing the tenfold either inflation or reduction works the same.
$1=€.10 or €1=$10
I suck at math, someone double check me.
Currencies and economies are … complicated. To put it in very simple terms, a unit of money represents buying power. Let’s go with buying a commodity. A unit of wheat.
You can buy one wheat for $1. You can buy one wheat for €1. $1 = €1.
The € gets stronger. You need less € to buy the same amount of wheat. You can buy one wheat for 0.50€. $1 = 0.50€ since that’s how much you need to use to buy one wheat..
The dollar gets weaker, say thanks to inflation. It now takes $3 to buy one wheat. $3 = 0.50€.
>So if that’s the case, then would a currency value lowering mean it would be converted for more money? IE: if the dollar drops suddenly, potentially with inflation, and is worth a tenth of the euro, then does $1 = €10?
It’s the opposite. In this scenario 1 Euro would be worth $10 USD. if the value of the currency goes down it can be converted into less of another currency.