7 Currencies Worth More Than the U.S. Dollar in 2023
7 Currencies Worth More Than the U.S. Dollar in 2023
Investopedia Mon, July 24, 2023
Learn about currencies that are more valuable than the U.S. dollar, as well as which factors contributed to their strength. When it comes to currencies, the terms "price" and "value" have distinct meanings. The price of a currency is the rate at which it can be exchanged for another currency. On the other hand, the value of a currency, refers to its purchasing power, that is, the amount of goods or services that can be bought with a unit of the respective currency. The price of a currency, better known as its foreign exchange (FX) rate, does not always reflect its value or worth (purchasing power).
For example, a country may have a high exchange rate due to high demand for its currency in the FX market, but if prices are high in that country (i.e., it has low purchasing power), then the value of the currency may be lower than what the FX rate suggests.
With the US dollar, which is the world's reserve currency, it is interesting to note the other currencies that are priced higher than the US Dollar.12
Types of Exchange Rates
An exchange rate is the rate at which one currency can be exchanged for another.
There are two (2) basic types of exchange rates: a fixed exchange rate and a floating exchange rate. A fixed exchange rate is a rate set and maintained by a country's government or central bank. The rate is pegged to some value, such as gold or another currency like the US Dollar. This system aims to keep the value of a country's currency stable.
The other type of exchange rate is the floating exchange rate. This is a rate that is determined by the foreign exchange market through supply and demand. Under a floating rate exchange system, a currency's exchange rate can fluctuate from moment to moment.
Calculation of an Exchange Rate
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