Just as the oceans and seas have their ebbs and flows, so does money, so does currency. And each country, has their own currency, which also ebbs and flows; meaning the rate or value of that currency changes.
And there are a lot of different currencies or money for various countries out there. With the EU using the Euro, that makes going to most European countries easy to know the money they use, the Euro.
But you have:
USD or US Dollar
GBP, our Great British Pound
Russia has the Ruple
China has the Yuan
Various countries use a form of the Peso, their own Dollar, or their own Pound.
A few years ago, India went through a demonetisation process. This meant that the currency used prior to the act of demonetisation was “stripped of its status as legal tender”. It basically means the old money is no good, valueless, it cannot be used to buy anything.
Why was this done? To clear out a system that used a lot of cash, and cash cannot be traced, and cash is used for illegal gains, and also to avoid paying taxes. You had to turn in your old money to get the new currency, and this old money was registered and you if you had a lot of it, it was a flag to the government and economy, you may have not paid taxes on it.
Not an easy thing to go through demonetisation.
And to try and explain how and why currency exchange rates change, is not easy as well. It can be something as simple as supply and demand within a country’s economy, how much a country is in debt, to political aspects. These and many other factors, can influence the value of a specific currency against other currencies.
Forex/Foreign Exchange Market
Just as with stocks and shares, there is a market to buy and sell foreign currencies, it is called Forex.
Forex trading is basically like buying and selling shares/stocks. You want to buy a currency at a low value, to sell it later when that value is higher, making you a profit.
How easy is it to make money doing Forex trading? Not easy at all!
The factors that can influence a currency’s value are numerous, and need to be monitored not just daily, but possibly hourly!
The political aspects alone can drive a currency up or down hourly. If you look at the world today as of this writing, you have our Prime Minister being investigated for illegal gatherings and parties, and you also have Russia amassing troups near the Ukraine.
All these factors can influence the a currency’s value. How do you keep track of all that? Yet, there are those traders that do just that.
So just as with anything of value, currency can itself be traded, bought and sold to make a profit. But it can be a very fickle Mistress and needs to be monitored closely.