Money around the world — Part 4: Currency exchange
Youth can learn about exchange rates and determine the prices, in U.S. currency, for everyday items.
After talking about how other countries have different money than us in “Money around the world – Part 1: Foreign currency,” some kids may wonder how we buy and sell between countries. This is a great time to talk about currency exchange and demystifying the math that goes into it. Michigan State University Extension’s 4-H Youth Development has an activity for youth to figure out exchange rates themselves.
Countries establish an exchange rate for their money, which tells everyone how much one currency is equal to how much of another currency. Exchange rates vary depending on many different factors, including politics and world events. Find a few examples to show students some current exchange rates—XE Currency Converter is a one source for current information.
Help students work through the math of various currencies. For example, “If you were in South Africa and wanted to buy a t-shirt for 400 rand, how much would that be in U.S. dollars?” In October 2017, the exchange rate is about 14 rand to one dollar. This means we would divide 400 by 14 to find out what the equivalency would be in U.S. dollars ($28.57).
“If you were in Mexico and wanted to buy a cool soft drink for 10 pesos, how much would that be in U.S. dollars?” With an exchange rate of 19 pesos to one dollar as of October 2017, we find that 10 divided by 19 is $0.53 USD. With younger students, this is a good opportunity to talk about what we call fractions of a dollar (i.e., we would usually say 53 cents instead of $0.53). Some other countries have a similar system, where fractions of their main unit have a different name (pence, kopeks, etc.), and some countries call all of their units the same thing (pesos, rupees, etc.).
“If you had a friend visiting from Nepal and wanted to explain how much a bunch of bananas cost at your local grocery store ($2), how many rupees would that be?” Here you want to help students see the math a little differently. If the exchange rate is 104 rupees to one dollar, we need to multiply that by 2 to get 208 rupees.
Consider having youth do some research about prices in other countries and find the exchange rates to discover how much the purchase would cost in different currencies. Their own interests can drive this exercise.
With some simple math skills, youth can start to understand money around the world. Learning how to exchange one currency for another is a great activity for financial literacy and global learning. For more ideas to extend learning about money around the world, make sure to read the other articles in this series:
- Money around the world – Part 1: Foreign currency
- Money around the world – Part 2: Create your own money
- Money around the world – Part 3: Dollar bill investigation
Michigan State University Extension and Michigan 4-H Youth Development help to prepare young people for successful futures. As a result of career exploration and workforce preparation activities, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives.
To learn about the positive impact of Michigan 4-H youth career preparation, money management and entrepreneurship programs, read the 2016 Impact Report: “Preparing Michigan Youth for Future Employment.”