Comments on: How do you come up with a value for a new currency? http://www.myylt.com/2008/07/31/how-do-you-come-up-with-a-value-for-a-new-currency/ Discussion of Forex Trading and Currency Trading Sat, 11 Feb 2012 11:01:54 +0000 http://wordpress.org/?v=2.3.3 By: jargent100 http://www.myylt.com/2008/07/31/how-do-you-come-up-with-a-value-for-a-new-currency/#comment-6178 jargent100 Tue, 30 Nov 1999 00:00:00 +0000 http://www.myylt.com/2008/07/31/how-do-you-come-up-with-a-value-for-a-new-currency/#comment-6178 The short answer is "You don't, the market does." You'll need to produce something that will make people want to buy and use your currency. Over time, the market will figure out the value of your currency relative to others, and set the exchange rate accordingly. Initially, your currency will be worth almost nothing, because there is nothing to back it and no market for it. You can just say "Here's my money, and I want $1.50 for one unit of it!". The currency needs to prove itself. Check out the wikipedia entry on Exchange Rates, it should shed some light on how exchange rates are set. The short answer is "You don't, the market does."

You'll need to produce something that will make people want to buy and use your currency. Over time, the market will figure out the value of your currency relative to others, and set the exchange rate accordingly.

Initially, your currency will be worth almost nothing, because there is nothing to back it and no market for it. You can just say "Here's my money, and I want $1.50 for one unit of it!". The currency needs to prove itself.

Check out the wikipedia entry on Exchange Rates, it should shed some light on how exchange rates are set.

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