Currency is the system of money in general use in a country. It includes coins, banknotes, and digital balances. The dollar, euro, yen, and yuan are examples. Currency serves as a medium of exchange, a unit of account, and a store of value. It makes trade possible without bartering. Its value is set by markets, central banks, and the confidence of its users.

Currencies fall into categories. Hard currencies like the US dollar and Swiss franc are widely accepted and stable. Soft currencies are less stable and less accepted outside their home countries. Some currencies are pegged to another, like the Hong Kong dollar to the US dollar. Others float freely, their value determined by supply and demand. A few, like the euro, are shared across multiple countries.

Currency values shift constantly. Exchange rates move on interest rates, trade balances, inflation, and political events. A strong currency makes imports cheaper but exports more expensive. A weak currency does the opposite. Tourists feel the difference immediately. Businesses hedge against currency risk. Central banks intervene to stabilize their currencies when volatility threatens the economy. Currency is both an economic tool and a symbol of national identity.

Common currencies

• US dollar
• Euro
• Japanese yen
• British pound
• Chinese yuan