Editor's note - You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.
There are two primary reasons why you would care about current exchange rates.  Either you’re planning to leave the country and need to budget the amount of money you have against the other countries economy, or you’ve done some investing and exchange rates dictate the profit you can make.  I’ve never had the pleasure of doing either but from a mathematics perspective, exchange rates fascinate me.

Exchange rates are determined on basic supply and demand principles.  For example, if interest rates increase in the United States, the demand to save money in the best US banks will increase, adding value to the dollar.  On the contrary, if inflation occurs at a higher rate in the US than in other countries, the demand for US goods decreases thus decreasing the value of the dollar.

Everyday, the value of a countries currency fluctuates and as of February 2012, we’re looking at the following currency conversions:

Converted to a US Dollar
A US Dollar Converted to
British Pound1.585060.63089
Canadian Dollar1.001060.99894
Australian Dollar1.070090.93450
Mexican Peso0.0772012.95390
Swiss Franc1.093540.91446
Russian Ruble0.0331130.20270
Indian Rupee0.0203449.16510
Japanese Yen0.0131476.12140
Israeli New Shekel0.267963.73184

A common misconception is that purchasing power is equal among nations, so If I moved to Russia, I immediately increase my wealth 30 fold.  The McDonald’s dollar menu in the US could be the 30 ruble menu in Russia so anyone planning a move to a country simply because the dollar is “worth” more than the local currency will be in for a big surprise.

With all of the price increases in the United States, you’re probably thinking that the US is the most expensive country to live in but that’s not close to accurate.  Most economists would rank the US as the 10th – 15th most expensive country to live in and if your looking to blow your wealth as fast as you can, you may want to consider moving to one of these five most expensive countries.

  1. Japan
  2. South Korea
  3. Russia
  4. Taiwan
  5. Norway

If you break it down even further, the United States only has one city ranked in the top 10 as most expensive and it’s not New York or Los Angeles as you might think.   Chicago continues to be the toughest city on your wallet but again, if you compare it to Tokyo or Moscow, it’s no contest.

Planning international trips can become very difficult if you plan to pay for everything with cash because some countries just won’t accept US currency.  This means that you’ll have to find a currency conversion center, which can charge a fee.  The smartest thing to do would be to find a credit card that is accepted worldwide but even that solution can cost you hefty international transaction fees.  Make sure you have a plan in place before leaving because ending up in a country with no way to pay for goods in services can be an absolute nightmare.

Author Bio

Total Articles: 182
After amassing more than $255,000 in debt on a math degree from the University of Miami, Michael now enjoys spending time at home and writing about personal finance.

Article comments

James says:

I can’t say that exchange rates fascinate me but they don’t make you think about what is the best time to exchange. whether it be before you leave the country or once you arrive in your destination.

Andy says:

The US dollar has been on a tear this month! Good time to invest in foreign equities or related funds because I think, with our huge deficit, the US dollar is likely to go down in the longer term – which increases the value of foriegn holdings.

Fred says:

I think the dollar will continue to lose vale as our economy gets worse

CreditShout says:

Wow thanks for posting this. It’s interesting to see how our dollars stacks up against other currencies in the world. Though I expected the Asian countries to be most expensive, I wasn’t anticipating Russia! Though I’m not planning on going there anytime soon…

cindy says:

I have old coins want to know how much they are worth an where to bring them