Expert: Docs99 - 5/20/2009

Question
Hi,
  I livining in india.One US dollor is 42 indian rupee.How the difference comming?explain me in simple & with example.

Answer
The exchange rate is the price of one currency in terms of another currency. Basically, the exchange rate for a currency comes from a relationship between the monetary base --domestic currency--- and the amount of reserves in hard currencies and precious metals in the monetary authority.  Hope this helps.