I wonder why the American Dollar is cheaper than the British Pound and the Euro, and why the Russian Ruble is cheaper than the Polish Zloty?
Two ways to look at this. Currency is a commodity that is exchanged and traded. The value of anything is what people will pay for it. When a government issues more currency, each existing unit is worth less. The value of common precious metals in a country also determines the value of currency. Central banks in each country try to set an exchange rate but if the rate is too low people would try to exchange it for precious metals and if the value is too high, it is not accepted. There are global commodities within each country. People around the world specialize in currency valuation and the market tends to be fairly efficient. 65.88 Russian Rubles to one US Dollar today 75.22 Russian Rubles to one Euro Major currencies tend to set the value of all others. Gold is now about 2,777.11 Rubles per gram US$42.15 per gram 65.886 Rubles per dollar by that calculation. What does the currency buy locally in globally traded items? So it is a sentiment, a valuation by traders, the value of common goods without taxes that can be moved at low costs of transport.