how is one currency more powerful than another? If you exchange $100 to 102 francs don’t you still have $100 but in francs?

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how is one currency more powerful than another? If you exchange $100 to 102 francs don’t you still have $100 but in francs?

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Anonymous 0 Comments

If you ignore transaction fees then yes. Until the rates change, at that point you may have more or you may have less. Rates change constantly.

The absolute values don’t matter other than as a psychological barrier. What matters are the changes in relative value.

If I want to buy something that is made in the USA then the manufacturer will be paying his staff in dollars which means his costs are in dollars. This means he’ll want to sell at a fixed price in dollars. If I want to pay in Euros and the euro has gone down relative to the dollar then to me the price will be higher. This a) costs me more and b) encourages me to buy a version of the product built locally which will still be the same price as before.

Things get more complicated when you allow for the fact that the manufacturer will need to buy parts, some of them will come from overseas and so their prices will also depend on exchange rates.

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