Finance, Forex and Investments

How the value of curriencies calculated for differend country..1 pound=70 rs,1$=45rs....why so ?

Why the pounds and dollars have higher value in indian currencies ...why not the same everywhere...?

Public Comments

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2. Because indian politicians are too corrupted.
3. because their economy is better than India...if the dollar or the pound rate is going down then it means India's economy is improving!
4. Value of currency depends basically on the purchasing power of a particular currency in the world markets. Hence the difference in the exchange rates.
5. The reason economists give arise to such phenomenon is known under law of one price where currencies adjust to real effective parity in accordance to purchasing parity. The issue is not settled in what it means for economic development. I would refer you Kenneth Rogoff 'The Purchasing Parity Puzzle' for excellent elucidation of the problem and on recent exposition see Paul Krugman and Maurice Obstfeld 'International Economics:Theory and Policy'