How does a country’s currency devalue
In: 2
Most currency is what’s called fiat currency. That means it has value because the people using it believe it has value. This only shows when other people /countries believe the money has less value. Of course this is compared to other currency. The most basic way to show this would be. Pick a product that has been around your ages. Let’s say rent. My rent for a 3 bedroom apartment is $1900.. In a few months it will go up we will say to $2100. My rent went up 10 percent. But I only got a 5 percent raise. I’m still working the same amount of time. Yet my money is worth less then it used to be. Compared to my rent of course. Rent inflated, my income went up less the inflation. So my money is not worth the same as it was a year ago. Inflation and a currency becaming less valuable are two sides of the same thing.
How does a country’s currency devalue
In: 2
Most currency is what’s called fiat currency. That means it has value because the people using it believe it has value. This only shows when other people /countries believe the money has less value. Of course this is compared to other currency. The most basic way to show this would be. Pick a product that has been around your ages. Let’s say rent. My rent for a 3 bedroom apartment is $1900.. In a few months it will go up we will say to $2100. My rent went up 10 percent. But I only got a 5 percent raise. I’m still working the same amount of time. Yet my money is worth less then it used to be. Compared to my rent of course. Rent inflated, my income went up less the inflation. So my money is not worth the same as it was a year ago. Inflation and a currency becaming less valuable are two sides of the same thing.
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