19th century international currency exchanges

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  • #17803
    johnhenry07
    Member

    Could you please explain how international currency exchanges worked in the 19th century under the gold standard? I’m sure it’s very simple, but I’m having difficulty understanding why the value of a country’s would alter on the gold standard. If a certain country’s currency was exchangeable for a specific amount of gold, then why would the value of that currency change? I understand how a variance in interest rates or prices from country to country would cause gold to flow in or out, but why would the value of currencies change? Thank you very much for taking the time to answer all of our questions, it’s extremely helpful.

    #17804
    jmherbener
    Participant

    Each government issued fiduciary media, holding only a fraction of gold money against its currency issue. International currency traders could, then, devalue any currency in exchange for another that they thought over inflated to the point of impending official devaluation .

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