Let’s ignore money for a moment.
Say you are a rice farmer and want gold. You go to the local gold miner and offer 1 gram of rice in exchange for 1 gram of gold. He refuses, so you raise it to 10 grams. He still refuses, so you raise it to 100 grams. He still refuses so you raise it to 1.000 grams. He still refuses so you raise it to 10.000 grams. He still refuses so you raise it to 100.000 grams. He still refuses so you raise it to 1.000.000 grams… and so on.
KRW is the rice, USD is the gold.
It means a lot of people have KRW they want to sell and not very many people that want to buy KRW.
Currencies are just like anything else you can buy or sell…if you want to buy something with KRW you need to buy it from someone who has it. If a ton of people are trying to sell it it will get cheaper (I.e. a lot of want to get rid of their KRW). If nobody wants to sell then it gets more valuable and costs more. It’s just supply and demand.
I know it’s weird to think about buying and selling currencies themselves but they’re just placeholders for value…think of different currencies as two different objects that people might need to buy or sell, like different cars or houses or Pokémon cards or whatever floats your boat, and it makes more sense.
Latest Answers