Just one of those random thoughts I had on the train while half asleep. I thought I'd post it here as there's bound to be someone around here who can put me straight. Just to be clear, I'm not talking about the notes and coins in your pocket, as that's relatively easy to answer, but rather on the national and global scale. So, firstly the easier one: Save for the relatively few (I believe) cases where governments 'determine' the value of their currency, who or what decides how much one currency is worth against another? I know large institutions can and do buy and sell currency of different nations in the hope of making a profit, but what determines the price at which they buy and sell? Secondly, taking all currencies as a whole, how does the 'value' of the world increase (or decrease), and who or what decides this? I'm sure there is some obvious answer (or a link to some obvious website providing the answer), and I was probably even taught some of it in A-level Economics, but I did rather badly at that. So, can someone help me out?