What is Currency?
Currency is the means of purchasing through trade. Today, currency generally refers to printed or minted money. Sometimes only paper bills are thought of as currency, while other times coins are included. Currency involves the exchange of goods or services for cash. Exchange rates refer to a country’s price for the trade of items. Floating currency means that a country’s exchange rate is not fixed or set in place by a main bank, but fluctuates. Fixed currency, on the other hand, is set and is the opposite of floating currency. Fixed currency is also called pegged currency and it is not commonly used, although it is often associated with the Euro and the US Dollar (USD). The term legal tender means currency that is legally permitted to be used to obtain goods or services in a particular country. Legal tender is usually the country’s own unit of currency such as the USD in the United States, but sometimes a country may use the currency of another country as legal tender. For example, the
