How does the economy work?

[Drew]

I've never really understood how the economy works, so now I'm asking you lot.... As I currently live between the UK and Italy but my money is all in the UK, I have been essentially raped by the low exchange rate, according to xe.com it's currently £1 = €1.02 yet when I first got to Italy it was £1 = €1.23. This year is definitely going to bankrupt me! But my first question is, how do currencies trade? I'm completely confused about this, because I've seen on bbc news that Russia has devalued its currency but I thought it was done by market trading? :confused:

The second question is about the stock market. Now on the tele you always see people shouting things, what if nobody is listening to them? What are they exactly shouting?

Just a few curiosities before I become a bum :p :

[Dave B]

Remove "how" from your question and you might be closer to your answer! :p

[Kneeslider]

I just love easy to answer questions!

[Mark in Oshawa]

After a 4 year university course you might feel qualified to give this man an answer.

I think the currency markets are basically a case of the world's investors putting faith or no faith in a countrie's economy. How that works with the Euro when you have 15 plus nations all using the same currency with different levels of government interventions in the economy factors into all of this a mystery.

I do know this much. Countries with economic models with less government intervention but with strong regulartory control tend to do ok while nations that meddle too much always seem to have problems with their currency. Unless of course your country has a dependence on a raw material that is dropping price......god this makes my head hurt.....

[SOD]

the UK is trying to reguvenate their export market by making the price of sterling cheaper.

[leopard]

It seems that currency is the simpler form of trade, which basically have strong dependency on public faith upon certain countries whether or not favorable relating to its general regulation of economic, investment climate, or even political situation.

The more advance trade form which needs sharper analysis before taking a decision is foreign exchange trade. Carefulness reading previous market to forecast the closest approach to be in effect in the future is essential, besides aforesaid factors and anything related like price performance of commodity such as gold may interfere the final result of the trade.

Not clear how is it correlated, it is obviously high risk of method earning money. Get ready and make sure that you don't have potency of heart attack, if not successful there will be only one word, bankrupt.

[Camelopard]

I do know this much. Countries with economic models with less government intervention but with strong regulartory control tend to do ok while nations that meddle too much always seem to have problems with their currency.

Yep just like the good old USA and their banks................... :)