PBA is right as far as domestic goods and services are concerned. In anything involving other countries (imports, exports, transfers, foreign aid), the value of every currency is determined in trading against other currencies. Traders judge a currency in terms of the credibility of the country’s fiscal policies (how it stays within its budget) and monetary policies (how its central bank refrains from “printing money,” among other things). There’s almost no wiggle room; ask anyone from Greece or Spain.
