Today, purchasing goods and services has become quite simple then it had been before. Every country trades with other countries on the planet. Lots of trades get involved among which many of these are monetary based. xchange of America now offers notary services who want to invest in foreign currency.
The barter ones are seldom found, as it does not function as the practical solution. And this is why the use of cash has come into existence. However, what if a dealer wants to buy and sell products in different foreign nations? He might face a problem since the money of foreign country will disagree.
This affects even a frequent businessman; say as an example, if the British pound is strong then what will the individual residing in the UK do? He will assess the currency of other countries, state if he assesses Canada and when he finds the money of the country low then because of his Canadian products would be cheaper. .
Often people have a question that identical goods should have the same price no matter its money. These are one of those groups of people who believe in the law of one price.
The answer to this question is that when this could have been the case then buyers would not move in search of the location where goods were cheap and market where it had been the highest.
For instance, say if product A costs 100 in the UK and in the USA it's $110. The expense of transportation would be $10. So, the buyer remaining in the UK won't purchase goods from the USA, but when there's negative fluctuation in the merchandise price and money value of USA.