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Cracking currency: a beginner’s guide to foreign exchange

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Having an awareness of currency exchange rates is extremely useful, but complicated terminology makes it extremely difficult. Here’s our handy guide from the thriftiest of sources – our Student Economist.

Family holidays are a period of blissful economic ignorance for children. However, when the time eventually comes to booking our own holidays and organising our own finance abroad, we are faced with cracking a truly befuddling concept: currency exchange rates.

The internet is inundated with attempts to explain this, but complicated terminology makes it extremely difficult. The following example strives to simplify currency exchange rates in a way that is accessible to all - through the medium of snacks:

Three boys have snacks in a playground. Charlie has chocolate. Harry and Hamish disappointingly have Haribos. They want to trade for some of Charlie’s chocolate. Charlie makes an offer: 5 squares of chocolate for 5 Haribos. Harry seizes the opportunity, leaving Hamish still in want of chocolate. Charlie realises the great demand of his chocolate and decides to get a better deal out of the exchange. He offers Hamish 4 squares for 5 Haribos, who takes it. As a result, the value of…

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