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Currency

Definition:

Currency is a legal tender, commonly used to facilitate trade and payments, that is officially sanctioned by a particular country. It is a medium of exchange that is used to pay for goods, services, and debts.

Key Features:

  • Legal Tender: Currency is declared legal tender by the government of a country and is widely accepted as payment.
  • Uniform and Legal: Currency has a uniform design and value throughout the country, ensuring consistency and fairness.
  • Divisible: Currency is divisible into smaller units, such as coins or notes, to facilitate easier transactions.
  • Durable: Currency is typically made of durable materials that can withstand repeated use.
  • Limited Supply: Central banks control the supply of currency to regulate its value and prevent inflation.
  • Unique Design: Each country has its own unique currency design, which distinguishes it from other countries.
  • Symbol of National Identity: Currency can symbolize a country’s pride and national identity.
  • Medium of Exchange: Currency serves as a medium of exchange, facilitating trade and payment transactions.

Types of Currency:

  • Fiat Currency: Fiat currency is not backed by a physical commodity, such as gold, and is controlled by the central bank.
  • Commodity Currency: Commodity currency is backed by a specific commodity, such as gold or silver.
  • Cryptocurrency: Cryptocurrency is a digital currency that is not controlled by a central authority.

Examples of Currency:

  • US Dollar
  • Euro
  • British Pound
  • Japanese Yen
  • Chinese Yuan

Importance:

  • Facilitates Trade: Currency enables smooth and efficient trade by providing a common medium of exchange.
  • Maintains Stability: Properly managed currency helps maintain economic stability and price predictability.
  • Promotes Stability: A stable currency encourages investment and economic growth.
  • Reflects Economic Strength: The value of a currency reflects a country’s economic strength and stability.
  • Meets International obligations: Most countries have their own currency, which is essential for fulfilling international obligations.

FAQs

  1. Which currency is No. 1?

    The Kuwaiti Dinar (KWD) is currently the highest valued currency in the world.

  2. What is the currency in India?

    The currency in India is the Indian Rupee, symbolized as โ‚น and abbreviated as INR.

  3. How much is $1 US in India?

    As of 2024, $1 US dollar is approximately equal to โ‚น83 Indian Rupees, though exchange rates can fluctuate.

  4. When was 1 dollar equal to 1 rupee?

    In 1947, at the time of India’s independence, 1 US dollar was roughly equal to 1 Indian rupee, but the value has changed significantly since then.

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