Who determines the currency exchange rates?
cidyah asked:
OK, we see that $1 US = $0.9 AUD etc and it keeps changing everyday. How is it actually determined and who decides what it should be? Serious replies only please.
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OK, we see that $1 US = $0.9 AUD etc and it keeps changing everyday. How is it actually determined and who decides what it should be? Serious replies only please.
April 27th, 2010 at 4:50 pm
The value of the US dollar, for the most part, is dependent on how much money is in circulation in the US. Lets say there are $500M USD in circulation in the US, and $1USD = $1AUD. If we print off another $500M USD, making the total USD in circulation $1B, then the exchange rate would theoretically be at $1USD = $0.50AUD.
The Federal Reserve Bank (the Fed) is in charge of the monies in the US. They decide how much money is in circulation by buying and selling government securities. Colin