The currencies of the world are used as a medium of exchange in their respective countries. They can be exchanged for goods and services, as well as for other currencies. Coins and paper money are two forms of currency. There are numerous currencies in use around the world, but some of the more well known are the U.S. Dollar, the British Pound, and the European Euro.
In many cases, the currencies of the world consist of a larger monetary unit and a fractional unit. This fractional unit is usually valued at 1/100th of the larger unit, such as is the case with the U.S. Dollar and its fractional unit, the cent. Mauritania and Madagascar have fractional currencies worth 1/5th of their larger currency, and are the only two remaining countries in the world whose currency is not based on a decimal system. However, the phenomenon of price inflation, common to nearly all of the currencies of the world, has caused these particular fractional currencies to be of little practical use.
Throughout the history of money and currency, it has been common at times for more than one country to use the same currency. For example, most of the countries of continental Western Europe use the Euro as their currency. This particular case was a deliberate collaborative effort between European nations, but it can also come as a result of the insolvency of one currency, 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, while not actually being the same currency. Many countries, including Australia, Canada, Singapore, Zimbabwe, and Jamaica use currencies called Dollars, just as the United States does, but they are altogether different currencies with different values.
Foreign exchange markets exist to facilitate the exchange between currencies of the world. One currency can be exchanged for another, based on prices that continually fluctuate. 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 little of it. For example, if one Euro can be exchanged for $1.45 U.S. Dollars (USD), the Euro might be said to be strong, compared to if it could buy only $1.10 USD.
