The economics of currency exchange rate has also been rather elusive to me and I have never been able to fully understand how it works. Why do exchange rates fluctuate and what does it mean when one currency is weaker/stronger than another and how does that affect the currency that I am using? People often talk about losing money or getting more money when they exchange currency but what does that mean exactly? For example, looking current at the USD/GBP exchange rate. *1 GBP = 1.126 USD.* If I exchange £ to dollars, am I getting more money or losing money? Which one is stronger? Wouldn’t *1.126 USD not simply be of equivalent value to £*
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The forex market.
Imagine the stock market, except instead of trading parts of a company, you’re trading confidence in a country’s currency.
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