A currency is a form of money that is officially used in a country or economic region to buy goods and services and to store value. Currencies are issued and regulated by central banks or governments and are used as a medium of exchange in everyday economic activity.
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Currencies play a central role in global trade, finance and international investments.
Different countries use different currencies, such as the euro in the eurozone, the US dollar in the United States or the Japanese yen in Japan. The value of one currency relative to another is determined in the foreign exchange market, also known as the forex market.
Currency values can fluctuate due to factors such as interest rates, inflation, economic growth and political developments. These changes influence international trade, investments and the purchasing power of a country’s money.
Short example:
Suppose one euro can be exchanged for 1.10 US dollars. This means €100 can be converted into $110.
If the exchange rate later changes to 1 euro equals 1.05 US dollars, the same €100 would only be worth $105.
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