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How the value of money is determined

Have you ever wondered how every currency value is determined? Well, we have the answers!

NatalieWaller
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How the value of money is determined

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  1. How the Value of Money Is Determined

  2. What is money? • According to Investopedia, money is an officially issued legal tender that typically consists of notes and coins. • The government defines money as the circulatingmedium of exchange.

  3. How the Value of Money Is Determined • The value of money is determined by the demand for it. • Three ways to measure the value of dollar: • Foreign exchange rate • Valueof treasury notes. • Foreign exchange reserves

  4. Foreign exchange rate Value of treasury notes The demand and supply of money is taken under consideration to determine the exchange rate by the forex traders. Based on that, they factor their expectations for the future. Due to this, the value of money fluctuates throughout the day. Treasury notes could be converted to dollars in the secondary market for treasuries. The rise of demand for treasuries will increase the U.S dollar value. Foreign exchange reserves This refers to the amount of dollars that is held by foreign governments. The more they hold, the lower the supply. That makes U.S. money more valuable. If foreign government sell all their dollar and Treasury holdings, the value of U.S dollar would decline.

  5. Top money transfer service providers • Western union • PayPal • Spot on money • Xoom • Money gram

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