World currencies are used for exchange and can be exchanged for goods, services and other currencies. They consist of a larger monetary unit and a fractional unit, with some countries having fractional currencies worth 1/5 of their largest currency. Currencies can be shared between countries or have the same name but different values. Foreign exchange markets facilitate currency exchange based on fluctuating prices, with currency strength determined by its exchange rate with other currencies.
World currencies are used as a medium of exchange in their respective countries. They can be exchanged for goods and services as well as other currencies. Coins and paper money are two forms of currency. There are a number of currencies in use around the world, but some of the best known are the US dollar, the British pound and the European euro.
In many cases, world currencies consist of a larger monetary unit and a fractional unit. This fractional unit is usually valued at 1/100th of the largest unit, as is the case with the US dollar and its fractional unit, the cent. Mauritania and Madagascar have fractional currencies that are worth 1/5 of their largest currency and are the only two countries left in the world whose currency is not based on a decimal system. However, the phenomenon of price inflation, common to almost all currencies in the world, has made these fractional currencies of little use.
Throughout the history of money and currency, it has sometimes been common for more than one country to use the same currency. For example, most countries in continental Western Europe use the euro as their currency. This particular case was a deliberate collaborative effort between European nations, but it can also result from a currency default, which is then dropped, and a foreign currency adopted in its place.
In other cases, the currencies of more than one country may share the same name, even though they are not the same currency. Many countries including Australia, Canada, Singapore, Zimbabwe and Jamaica use currencies called Dollars, just like the US does, but they are completely different currencies with different values.
There are foreign exchange markets to facilitate the exchange between currencies of the world. One currency can be exchanged for another, based on continuously fluctuating prices. The price of one currency in terms of another can change based on economic data, trade policy and other factors. A currency is said to be “strong” if it can be exchanged for a relatively large amount of another currency, and “weak” if it will buy only a small part of it. For example, if one euro can be exchanged for $1.45 United States Dollars (USD), the euro could be said to be strong, compared to if it could only buy $1.10 USD.
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