What is Currency?
A currency is the system of money circulation or money in common use followed in a country, particularly for people in a nation. Money can be used as a medium of exchange in any form, particularly circulating banknotes, cash and coins. Each country possesses its own value of currency since there are different types of currencies which are used in different countries. For example Indian currency is represented in Rupees (Rs, INR). Now let's explore the currency system in different countries and thus how currency converters work.
Examples and Symbols of Currency
Different countries use their own currency value and symbol. That said, we have brought you some of the most popular currencies of the world as per trade and commerce.
Let’s say, your plan to visit a foreign country, or you are purchasing something online from another country. You will see that the price of the item will be marked in a different currency, which will be not be same as your country's currency and you’ll want to be able to figure out how much the product costs in your own currency so that you can get the final price you have to pay and thus make a decision if or not to buy the item.
Having said that, let’s consider an example. If you want to buy perfume from any online site in China. The cost of perfume is 60Yuan. How much does the perfume cost in dollars? Now in order to find the value of perfume in dollars, you would require knowing the conversion value of Yuan to dollars. The table given below depicts you different values of currencies in comparison to a US Dollar (USD).
Exchange Currency Rate
An exchange rate is basically how much it costs to exchange one currency from another. As currencies across the world are consistently being traded (bought and sold), the exchange rate is inclined to change from week to week.
Let’s say if the USD (US dollar) to CAD (Canadian American Dollar) exchange rate is 1.0950, it implies that it costs 1.0950 CAD for 1 USD. The 1st currency listed always stands as 1 unit of that currency while the exchange rate shows how much the 2nd currency (CAD) is required to buy 1 unit of the 1st currency (USD).
Exchange Rate Example
Let’s do some currency conversion. For that, we will use our currency converter. So, in order to change Thai Baht to the foreign currency, you will need to multiply the amount in Baht by the exchange rate. Thus,
Foreign currency = Thai Baht x Exchange rate
Sarah is going to the US and changes 80 000 Baht to USD. How much USD does she get?
1 Baht = 0.027778USD
Therefore, 80 000 Baht → 80 000 x 0.027778 = USD 2222.24
Solved Examples Using Currency Converter
Alice sees a pair of shoes for sale on a cruise ship for €70. Then, she finds the same shoe online for £55. She wants to buy the product paying the cheapest price possible. On that day the exchange rate is £1 = €1.25. Where should Alice buy the shoe from?
For this problem, we can either convert from £ to € or from € to £.
Now, let’s convert from £ to € and we get:
£55 × 1.25 = € 68.75
Alice should buy the shoe on the ship.
Converting from € to £:
€70 ÷ 1.25 = £56
Alice should buy the shoe on the ship.
The symbol of Indian Rupee was accepted by the India Government on 15th July 2010.
The Indian Rupee sign symbol is a depiction of Indian ideology.
Dollar currency name withholds more than 20 countries
The Indian Rupee symbol imparts a unique identity to the Indian currency that helps to distinguish it from similar currencies of other nations such as Indonesia, Pakistan, and Sri Lanka.
FAQs on Currency
1. What Exactly is the Concept of Money?
Answer: To help you grasp the concept of money easily, understand that for buying anything we need money, right? Now, what is money? Money is what we use as a medium of exchange such as notes, coins, etc in order to pay for products purchased or services hired. We pay money in return for anything like cake, chocolates, fruits, toys, car, house etc. That said, we exchange money for anything that can be used for selling or buying. Money is in the form of paper or coins and these days money is also used in digital form like e-wallets. Money is generally issued by a government and basically uses its face value as a mode of payment for things. Economists essentially describe money as a widely accepted means of payment.
2. What Exactly are Coins and Bills?
Answer: Any little piece of metal that is round, flat and authorized by a government is called a coin. It is mainly used as a medium of exchange of money. They may contain some numeral, text, or images on their surface. Governments produce them in a standardized weight and in huge quantities. Whereas, bills are currency notes authorized by the government. Following are some examples of coins and bills separately.
Coins: Penny, Dime, Nickel, Quarter, Half Dollar.
Bills: ＄1 Bill, ＄10 Bill,＄ 20 Bill,＄ 100 Bill.