Things You'll Need
Ask your class for examples of foreign currency that they may have seen on overseas holidays. It is not uncommon for young students, particularly if they are third grade or younger, to be unable to name any currencies. Write on your classroom board the names of each of the currencies you will be studying.
Pass around the foreign currency. The simplest way to do this exercise is to split your class into groups of three or four and give each group a note and some coins from a specific country, along with an envelope to keep them in after the exercise. Give your students five minutes to note the key artistic features of each currency, such as the colors and designs, and observe the key differences between each foreign currency and American currency.
Ask the students to put the currency back into their envelopes. Collect the envelopes and redistribute them so that each group is now studying a different currency. Ask the students to repeat the exercise, this time noting the differences between this new currency, the American currency and the money they had before.
Ask a representative from each group to read out a selection of their findings. This needn't be exhaustive. You need each group to read only enough to provide the other groups with an idea of the key features of each currency. Occasionally, you may find that some groups are comprised entirely of children who are afraid of speaking in front of the class. If that is the case, you can offer to read the answers for them.
Ask your students to name a list of items that they commonly buy, along with the cost of each item. Write these on your classroom board as they are offered by the class. Typical items you can expect are toys, fast food meals, and iPhone apps. Once you have four or five items, write the currencies' exchange rates underneath. Explain the concept of exchange rates, keeping it simple. For example, one U.S. dollar is 0.60801362 British pounds, so if British currency is one of the few being studied by your class, just write $1.00 = £0.60p
Perform some simple sums with your class to find out the price of the items in foreign currencies. For example, if one of the items is a Big Mac, you could write the following sum:
If one Big Mac costs $3, how much would that be in British pounds?
Ensure that you use only whole dollar amounts when writing the sums. The idea isn't to sharpen your students' math skills as much as it is to impress upon them the abstract nature of money and the idea that the same thing can cost different amounts in different countries. This can be a difficult idea for younger children to grasp and should initially be taken slowly. If your class is coping well with these elementary sums, you can easily increase their difficulty by incorporating more foreign currencies. For example, you could ask: "If two Big Macs cost $6, how much would that be in British pounds and French francs?"
Ask your students to pretend that they are kings or queens of their own islands. Their own island has its own currency. Then have them decide a name for the currency, what denominations it should have, what at least one denomination looks like (they can draw this) and its exchange rate with the dollar.
It takes some classes longer than others to grasp the concept of exchange rates. If you do not have enough time to cover this in your lesson, this exercise can make a nice homework assignment.