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

810 views

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

In: 53

20 Answers

Anonymous 0 Comments

No, you have 102 francs. Assuming the exchange rate is symmetric (it often isn’t, because banks & money changers charge a transaction fee for the convenience of exchanging currency), you can turn those 102 francs back into $100. However, there’s no guarantee that relationship will hold in the future. The dollar might appreciate vs. the franc, in which case you might only be able to exchange those 102 francs for $90. Or it might depreciate, and you might be able to exchange them for $150. The former situation is colloquially termed “the currency becoming more powerful”, because you can exchange $100 for 113 francs and get more for your dollars.

You are viewing 1 out of 20 answers, click here to view all answers.