question: How does currency exchange work? Like roughly BDT 80tk is 1 USD and BDT 120tk is 1 Pound. What determines this value?
comment: In the end, the value of a currency is determined by supply and demand. Lets assume that, for example, a company produces in the EU and exports them to the USA, where they are sold. The buyers in the USA pay with dollars, but the workers in the EU get paid in euros. Which means that the company has to buy euros with dollars, or else they would eventually run out of euros. So, if there are overall more goods shipped from the EU to the USA than from the USA to the EU, this also means that there are more people who want to buy euros with dollars than the other way round. Which means the euro-havers can get better deals, meaning that the value of the euro rises. This, in turn, means that the european company now makes less money than before (since the dollars they get from the customers are now worth less), and the EU will therefore export less goods to the USA. This means that, at some point, there will no longer be more people who want to exchange dollars for euros than the other way, and the exchange rate stabilises at this point. & #x200B; Then there is also a layer of speculants on top of that, but that is another story.
passages: Quotation using a country's home currency as the price currency is known as direct quotation or price quotation (from that country's perspective) 
  
  Quotation using a country's home currency as the unit currency (for example, USD 1.11 = EUR 1.00 in the Eurozone) is known as indirect quotation or quantity quotation and is used in British newspapers ; it is also common in Australia, New Zealand and the Eurozone.
   The difference in charges can be seen on the customer’s card statement. With DCC (left part of the above image), the amount becomes EUR 8.20, at an exchange rate of 1.1882. The DCC provider, in this example the merchant itself, also disclosed that it is using the Reuters Wholesale Interbank exchange rate plus 2.95%. Without DCC, the amount can vary with fluctuations between the GBP and EUR currencies, but on the date of this transaction it was EUR 8.04.
   Currencies are traded against one another in pairs. Each currency pair thus constitutes an individual trading product and is traditionally noted XXXYYY or XXX/YYY, where XXX and YYY are the ISO 4217 international three-letter code of the currencies involved. The first currency (XXX) is the base currency that is quoted relative to the second currency (YYY), called the counter currency (or quote currency). For instance, the quotation "EURUSD (EUR/USD) 1.5465" is the price of the Euro expressed in US dollars, meaning 1 euro = 1.5465 dollars. The market convention is to quote most exchange rates against the USD with the US dollar as the base currency (e.g. USDJPY, USDCAD, USDCHF). The exceptions are the British pound (GBP), Australian dollar (AUD), the New Zealand dollar (NZD) and the euro (EUR) where the USD is the counter currency (e.g. GBPUSD, AUDUSD, NZDUSD, EURUSD).
   Section::::Quotations.
  
  There is a market convention that determines which is the fixed currency and which is the variable currency. In most parts of the world, the order is: EUR – GBP – AUD – NZD – USD – others. Accordingly, in a conversion from EUR to AUD, EUR is the fixed currency, AUD is the variable currency and the exchange rate indicates how many Australian dollars would be paid or received for 1 Euro. Cyprus and Malta, which were quoted as the base to the USD and others, were recently removed from this list when they joined the Eurozone.
   EU sellers may validate the VAT number of a buyer residing within the EU Value Added Tax Area using VIES.
  
  All EU member states are part of the VAT area. However some areas of member states are exempt areas:
  
  Section::::EU VAT area.:Areas outside of the EU that are included.
  
  Included with the Republic of Cyprus at its 19% rate:
  
  BULLET::::- Akrotiri and Dhekelia (British Overseas Territory)
  
  Included with the United Kingdom at its 20% rate:
  
  BULLET::::- Isle of Man (Crown dependency)
  
  Included with France at its 20% rate:
  
  BULLET::::- Monaco (sovereign state)
   Transactions are often translated at the spot rate, i.e., the rate of exchange between the transaction currency and the functional currency on the date of the transaction. Example: Jim is traveling on business and pays a hotel bill for SFR 200. Jim's home currency is the GBP. On the date Jim pays the bill, the exchange rate is SFR2 = GBP 1. Jim records an expense of GBP 100. Alternatively, businesses may record transactions in another currency using some sort of standard rate for some period, such as the average rate for the month.
   Section::::Supply of goods.:Distance sales.
   Some countries while maintaining their own national currency have pegged its value to the euro. In some of these countries, there is a fixed exchange rate between the national currency and the euro and in this case the currency is actually a submultiple of the euro. In other countries, the national currency's value fluctuates within a band (generally 15%) around a set rate. Currencies pegged to the euro include the currencies of Bulgaria, Bosnia and Herzegovina and Cape Verde. Denmark has a foreign exchange band tied to the euro.
   If the rate is lower than 2.0000 on December 31 (say 1.9000), meaning that the dollar is stronger and the pound is weaker, then the option is exercised, allowing the owner to sell GBP at 2.0000 and immediately buy it back in the spot market at 1.9000, making a profit of (2.0000 GBPUSD − 1.9000 GBPUSD) × 1,000,000 GBP = 100,000 USD in the process. If instead they take the profit in GBP (by selling the USD on the spot market) this amounts to 100,000 / 1.9000 = 52,632 GBP.
  
  Section::::Terms.
  
  BULLET::::- Call option – the right to buy an asset at a fixed date and price.
   For example, a GBPUSD contract could give the owner the right to sell £1,000,000 and buy $2,000,000 on December 31. In this case the pre-agreed exchange rate, or strike price, is 2.0000 USD per GBP (or GBP/USD 2.00 as it is typically quoted) and the notional amounts (notionals) are £1,000,000 and $2,000,000.
  
  This type of contract is both a call on dollars and a put on sterling, and is typically called a "GBPUSD put", as it is a put on the "exchange rate"; although it could equally be called a "USDGBP call".
   A domestic supply of goods is a taxable transaction where goods are received in exchange for consideration within one member state. Thus, one member state then charges VAT on the goods and allows a corresponding credit upon resale.
  
  Section::::Supply of goods.:Intra-Community acquisition.
  
  An Intra-Community acquisition of goods is a taxable transaction for consideration crossing two or more member states. The place of supply is determined to be the destination member state, and VAT is normally charged at the rate applicable in the destination member state; however there are special provisions for distance selling (see below).
   A charge is a customs duty if it is proportionate to the value of the goods; if it is proportionate to the quantity, it is a charge having equivalent effect to a customs duty.
  
  There are three exceptions to the prohibition on charges imposed when goods cross a border, listed in Case 18/87 Commission v Germany. A charge is not a customs duty or charge having equivalent effect if:
  
  BULLET::::- it relates to a general system of internal dues applied systematically and in accordance with the same criteria to domestic products and imported products alike,
   The officially quoted rate is a spot price. In a trading market however, currencies are offered for sale at an offering price (the "ask price"), and traders looking to buy a position seek to do so at their "bid price", which is always lower or equal to the asking price. This price differential is known as the "spread". For example, if the quotation of EUR/USD is 1.3607/1.3609, then the spread is US$0.0002, or 2 pips. In general, markets with high liquidity exhibit smaller spreads than less frequently traded markets.
   As of 2016, only the Danish krone participates in ERM II. The currencies of Sweden (the Swedish krona), the three largest countries which joined the European Union on 1 May 2004 (the Polish złoty, the Czech koruna, and the Hungarian forint), the two countries which joined on 1 January 2007 (the Bulgarian lev, and the Romanian leu) as well Croatia, which joined the EU on 1 July 2013 (the Croatian kuna), are required to join in accordance with the terms of the applicable treaties of accession.
   Foreign exchange is traded in an over-the-counter market where brokers/dealers negotiate directly with one another, so there is no central exchange or clearing house. The biggest geographic trading center is the United Kingdom, primarily London. According to TheCityUK, it is estimated that London increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. Owing to London's dominance in the market, a particular currency's quoted price is usually the London market price. For instance, when the International Monetary Fund calculates the value of its special drawing rights every day, they use the London market prices at noon that day.
   A rate change of one pip may be related to the value change of a position in a currency market. Currency is typically traded in lot size of of the base currency. A trading position of one lot that experiences a rate change of 1 pip therefore changes in value by 10 units of the quoted currency or other instrument.
  
  Section::::Example.
  
  If the currency pair of the Euro and the U.S. Dollar (EUR/USD) is trading at an exchange rate of 1.3000 (1 EUR = 1.3 USD) and the rate changes to 1.3010, the price ratio increases by 10 pips.
   The reason for dividing the euro amount by the euro/pound exchange rate in this example is that the exchange rate is quoted in euro terms, as is the amount being traded. One could multiply the euro amount by the reciprocal pound/euro exchange rate and still calculate the ending amount of pounds.
  
  Section::::Evidence for triangular arbitrage.
   In the above case, someone buying 1 euro will have to pay US$1.33; conversely one selling 1 euro will receive US$1.33 (assuming no FX spread).
   In some areas of Europe and in the retail market in the United Kingdom, EUR and GBP are reversed so that GBP is quoted as the fixed currency to the euro. In order to determine which is the fixed currency when neither currency is on the above list (i.e. both are "other"), market convention is to use the fixed currency which gives an exchange rate greater than 1.000. This reduces rounding issues and the need to use excessive numbers of decimal places. There are some exceptions to this rule: for example, the Japanese often quote their currency as the base to other currencies.
   Currency pairs are generally written by concatenating the ISO currency codes (ISO 4217) of the base currency and the counter currency, and then separating the two codes with a slash. Alternatively the slash may be omitted, or replaced by either a dot or a dash. A widely traded currency pair is the relation of the euro against the US dollar, designated as EUR/USD. The quotation "EUR/USD 1.2500" means that one euro is exchanged for 1.2500 US dollars. Here, EUR is the base currency and USD is the quote currency(counter currency). This means that 1 Euro can be exchangeable to 1.25 US Dollars. 
   Section::::Usage.:Gibraltar.
  
  The currency of Gibraltar is the Gibraltar pound, issued by the Government of Gibraltar. Unofficially, most retail outlets in Gibraltar also accept the euro, though some payphones and the Royal Gibraltar Post Office, along with all other government offices, do not.
  
  Section::::Usage.:Clearing.
   Exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday. The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.
   Thus the real exchange rate is the exchange rate times the relative prices of a market basket of goods in the two countries. For example, the purchasing power of the US dollar relative to that of the euro is the dollar price of a euro (dollars per euro) times the euro price of one unit of the market basket (euros/goods unit) divided by the dollar price of the market basket (dollars per goods unit), and hence is dimensionless. This is the exchange rate (expressed as dollars per euro) times the relative price of the two currencies in terms of their ability to purchase units of the market basket (euros per goods unit divided by dollars per goods unit). If all goods were freely tradable, and foreign and domestic residents purchased identical baskets of goods, purchasing power parity (PPP) would hold for the exchange rate and GDP deflators (price levels) of the two countries, and the real exchange rate would always equal 1.
   Section::::The retail exchange market.
   Section::::Currency.:Exchange rates.
  
  Average for each year, in USD (US dollar) and EUR (euro) per GBP; and inversely: GBP per USD and EUR. (Synthetic Euro XEU before 1999). These averages conceal wide intra-year spreads. The coefficient of variation gives an indication of this. It also shows the extent to which the pound tracks the euro or the dollar. Note the effect of Black Wednesday in late 1992 by comparing the averages for 1992 and for 1993.
  
  Section::::Economy by region.
  