Exchange rates are determined in which market

Whether in your daily use or between countries, all the transactions today use either paper bills, credit cards, or cheques.

It was not the case in history when the currency was equivalent to either coins, gold, or a commodity.

Exchange rate explained for dummies

While the forms of money have changed over the years, money has always been the lifeblood of any economy, every household, or individual.

But what gives money its value, deciding the units we get for trading it and how is currency valued in foreign markets?

Keep reading to take a closer look and find out.

History of Currency and its Value

Currency didn’t exist until several hundreds of years ago and the barter system prevailed, where if you have a bag of rice and you need shoes then you could barter with the person having shoes.

But it was a faulty system. What if the timing didn’t work when you needed shoes, the other person didn’t want rice, or who could even justify it as fair trade?

To replace the barter system, we had currency, firstly as “commodity money,”

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