Why are some currencies more valuable than others?
In the global market, it is partly the perception of the currency that makes it strong or weak. At the moment, for example, it is felt that recession will come to the US (or is in fact already there). This means that people try to sell the currency and move to a stronger one. Supply and demand therefore means that the price of the dollar will fall compared with other currencies. In addition, there are various other factors – particularly the interest rate. If interest rates are high, people want to be in that currency and it will therefore become stronger. Strong currencies are not necessarily good, as you suggest, and it affects exports (including invisible ones such as tourism). This in turn tends to drive the currency down and so they maintain an equilibrium. There are always exceptions of course. Zimbabwe dollars is a good example of this, where there are political factors which come into play.
