What determines the foreign exchange rate?

This question has been inside me for quite some time. What decides the rate
of exchange of foreign currencies in a country? One Dollar is about 50 Indian
rupees. One yen is just 0.5 rupees. How is it calculated?
Also, at the present scenario, Japan seems to be more economically stable
than USA, though the value of yen is lower than dollar. So, if not the strength
of the currency, what else decides the strength of an economy?


  • bill190
    Apparently there are several different models...
    Exchange Rate

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