How is the value of money determined?

Who decides the value of money?

The answer to the second part is simple. The value of the currency is determined by the purchaser of the currency. These are mainly travelers, governments and foreign exchange traders. FOREX stands for Forex. Currency traders, governments and companies have to consider many factors in determining the fair market value of money.

Fair market value is the price at which a voluntary buyer and a voluntary seller merge. Buyers must consider many factors and considerations in an attempt to accurately assess the value of the currency at any given time. There are now about 180 different currencies in the world. Let us consider some of the factors used to determine the value of money.

Factors affecting the value of money:

1. Political conditions of the state – this includes the stability of the government, the extent of corruption, bribery, and the extent of law and order. It also includes country relations with other countries, especially with the United States, the United Kingdom, China and Russia. The government's form of government is also used to assess the value of money. Consider the broad range of government forms in Saudi Arabia, China, the United Kingdom, Venezuela and Thailand, to name a few.

2. Economic conditions – including work, unemployment, professional ethics, infrastructure, inflation and economic development. Whether it is old or new; computers and high technology, or more agriculture and manufacturing.

3. Perception of the outside world – Another country's perceptions and attitudes toward a country are as important as the reality of the country's actual situation. News, media, movies, newspapers, rumors and autobiography may give rise to opinions. How much do you know about a country? Usually, the less you know, the lower the value of money.

4. Demographics – The young population may mean a bright future, a person who is more open to change and development, and a growing workforce. The total population of a country is a factor. How much weight does this country have on the world stage?

5. The openness, trustworthiness and aptitude of national leaders – well-known leaders is a factor. These include political leaders, sports figures, business owners and celebrities. This is a national figure that affects their country, good or bad. Kim Jong Il, David Beckham, Nicole Kidman, Madonna, Osama bin Laden, Barack Obama and Vladimir Putin. These help have shaped the world's perception of a country.

6. Isolation and Openness – Continuum China is becoming more open and more transparent. This will help. Cuba is very closed and isolated. Some recent actions by Venezuela have made them more isolated. The Chinese market is becoming more open. Cuba, Kyrgyzstan, Russia and Japan have different degrees of openness to the outside world, which affects the value of their currencies.

7. Natural Resources – Developing the types and quantities of national natural resources certainly helps to build awareness of the value of the country's currency or lack of knowledge of the value of the country's currency. Consider mining minerals, forests, oil, fish and other resources. These resources must also be developed at a technical level.

8. Consider weather factors such as droughts, tsunamis, earthquakes and floods. How often do they occur and how the state reacts to them. These also affect the desirability, security and awareness of a country. Is it a tourist attraction?

9. War and Conflict – With which country is in the war, who is its ally? Their military strength and technology, the willingness to wage war and their purpose are to assess the strength of a country, stability and the important factors of its monetary value.

10. Education – This includes language, computer knowledge, internet connectivity, culture and religious beliefs. Scientists, entrepreneurs, writers and inventors are all influenced by the type and quality of education in a country.

In short, the value of money depends on many factors. Not only must we consider a single issue, but we also need to consider a comprehensive set of issues. In trading currencies, such as in FOREX, transactions are usually done in pairs. Values ​​must be related to certain things. Therefore, the performance of one country relative to another is also important. For example, common foreign exchange pairs are the dollar and the yen, the euro and the dollar. These and other factors determine the value of the currency. Some are tangible and some are intangible. Some are fixed and some are manageable. Sometimes this is the current news, sometimes a long-term situation. This is why the value of money changes frequently and there is no one or place to determine the value of money. And why currency exchange based on constantly fluctuating monetary values ​​can be an exciting, profitable, volatile, interesting or catastrophic form of business or investment.