If Nepal or Bhutan start to print more money, wouldn't it devaluate the Indian Rupee as they have their currencies pegged to the Indian Rupee? Wouldn't it give them more purchasing power?
No, and no.Any nation that inflates a pegged currency makes the peg unmaintainable: the counter-currency would (as with all items with underpriced Price Controls) would vanish from the exchange market, and the Black Markets price would reflect the actual exchange rate.One sees this in Argentina and Venezuela.
Is pegging of the Nepalese rupee to Indian rupee a good thing or a bad thing for Nepal? How?
Simple, all the major import trade of Nepal happens with India and of course the hidden treaties and agreement. Furthermore, if the NPR-INR rate would have been freely decided according to market forces then, just analyze.. whether will impede on Nepal..
Why is an Ethiopian birr more valuable than the Indian rupee?
Currency exchange rates are not an indication of the strength of the Economy.Just as one example, consider Kuwait. Kuwaiti Dinar is the highest valued currency. 1 KWD = 3.29 USD. Meanwhile, if you compare the economies, US is naturally ahead of Kuwait.On the other hand, there are currencies pegged to the USD, at par. That means, whatever fluctuations happen in USD rates, happen to those currencies as well. Examples of such currencies are Bahamian dollar, Panamian Balboa etc. We surely know that economies of Bahamas and Panama are not at par with the economy of the United States.After the hyper inflation in Zimbabwe, and the eventual crash and abolition of the currency Zimbabwean dollar, Zimbabwe moved to USD as their currency. In 2014, Zimbabwe Reserve Bank started minting Zimbabwe Bond Coins, called Zimbabwe dollars, whose value is at par with USD. Certainly, there is no comparison between these two economies.Even Bhutanese Ngultrum is pegged to Indian Rupee at at par rate. Still, Indian economy is stronger, is it not?Similarly, Ethiopian Birr and Indian Rupee have different exchange rates. That does not compare to the Economies.
Why is the Japanese yen so weak in comparison to the dollar, even if Japan is a developed country?
The low nominal value of the Japanese yen is a result of World War II. Wartime spending led to massive inflation, such that by end of the war the Japanese yen was valued at 360 yen to 1 US dollar. The Japanese yen was pegged to the US dollar at this value and did not change until 1971. Since then, the Japanese has risen in value, reaching a peak in 2011 of 76 yen to 1 US dollar.(source: http://en.wikipedia.org/wiki/Jap...)The strength of a currency is actually measured not by its nominal value, but by its change over time. A low nominal value typically signifies a weak currency, but the trajectory of the Japanese yen since 1971 shows that it is in fact a strong currency which increased in value against the US dollar by 374% over 40 years.More recently, the Japanese has lost some value (110 yen to 1 US dollar as of September 20th, 2014), but this due active government policy to devalue the yen in order to improve the competitiveness of the Japanese economy by making exports relatively cheaper as well as hold off deflation.