Let’s say their dollar=32.50 compared to our U.S. dollar.
That doesn’t mean a dollar literally equals 32 dollars and .50 cents there right?
How exactly does it work?
I want to fully understand it before I go out there and mess everything up.
How do I know how much to pay someone let’s say if they complete a job for me or how do I know exactly what a dollar equals there.
It’s exactly what you think. You could buy one of their dollars for $32.50 of your own. Think of foreign currency as trading cards and it might be a bit easier to get used to their value floating about. Just like trading cards their popularity can go up and down, how much people want them changes over time and this affects how much people will pay for it (the “exchange” value). When the value goes down you can buy more of them with your own money and the opposite is true when the price rises. Just like anything else you buy the value can be down to the cents. (Actual official foreign exchange rates are to 4 decimal places… so US Dollars per British Pounds right now are 1.2305 but this is rounded off for you when you exchange currency in a shop / bank / online)
Well yes and no. At face value, foreign exchange is all that matters – your dollar is worth 32.5 of theirs. It’s just a simple numbers thing. However, it is worth noting that the prices of various things might not be the same; a loaf of bread might cost two dollars here (so it should be 66 there), but might actually cost 80 there for various reasons (maybe a shortage, or they focus more on dairy products in that country). Not everything is one-to-one.
Normally, things will often have *roughly* the same cost between countries with the exchange taken into account, although obviously this differs with specific things.
For example, a dollar is worth about 80 yen (Japanese currency). If you go out for a quick lunchtime meal in Japan, it might cost you 1200 yen. When you do the conversion, that’s about $11, which is a normal amount to pay for lunch. The salaries are often roughly matching too, although obviously this is different in poorer vs richer countries. For example, the average monthly salary in Tokyo is 325,000 yen, which is equivalent to about $3000 US.
Seeing this question asked has confirmed how common it is for people in North America not to understand other currencies. I moved from the UK to Canada last year and i constantly hear people comparing CAD prices to USD prices and I’ve wondered why. I get a quick calculator out and see that the two prices are roughly the same.
Some folks literally just think they like different coloured paper to be used here.
I think in the UK we are more accustomed to travel since we can reach dozens of countries in a short time and for not a lot of money. So changing our money up to spend was more common.
Good luck with whatever it is you’re about to be doing. Make sure you get it right in your head so you don’t sell yourself short.
That’s actually exactly what it means. It also means that something that would be priced at $1 in a store here will have a price tag of roughly $32.50 there. Be prepared for sticker shock when buying a pack of gum.