How is a currency valued against another

 Who decides 60 Indian Rs is worth 1 USD. What factors do they consider to weigh currencies against each other. Why does it have to revalued after each passing day.These were some of the unexplored questions I had in mind. Whenever I try to look for an answer, I never found any which made me think this is something only an economist can comprehend but is certainly not.

Here is a simple story-like explanation on how a currency is valued against another.

Kay lives in Xioma, a small country bordered by the seas. Xioma prints its currency(Xs) in only one denomination that is 10. Kay takes home a daily wage of Xs.100 which is nothing but 10 Xiomic currency notes. One fine day, Kay, a chocolate lover, visits a chocolate shop that was newly opened in his neighborhood. There, a chocolate bar costs Xs.20, so Kay hands in two 10 currency notes to buy a bar of chocolate. The chocolate bought was of moderate quality but considered best in his locality.

Now, Kay learns about a new chocolate shop in a distant island nation that sells quality chocolates and decides to visit the store. There, Kay faces a problem, a single bar costs 500 and the store accepts 100 currency notes only. He did try to give the shop guy fifty 10 currency notes which the shop guy refused to take. Instead the shop guy asked for a five 100 currency notes for a bar of chocolate worth 500.

So Kay finds a guy David, who exchanges ten 10 currency notes for one 100 note. That way, by exchanging fifty 10 notes, Kay now has five 100 notes. The chocolate bought for 500 was too good that everyone from Kay's locality visited the shop and the shop's popularity grew eventually which means there is now a demand for 100 currency notes.

Everyone who want to buy the chocolate for 500 visited David first, as only he can exchange currency notes. Due to overgrowing popularity of the chocolate and demand for 100 currency notes, David now decides to exchange one 100 currency note for twelve 10 notes which in other words, a 100 currency note of the island nation is worth 120 Xiomic notes.

So now,

Did Kay lose money? No,
Did David gain money? No,
Did the value of Xiomia currency degrade? No
Did the cost of the chocolate increase? No

then, what has changed? the demand for 100 currency notes. 

A currency gets valued and devalued based on its demand and demand is monitored on daily basis. So when we say Rs.60 makes up $1, it means there is more demand for dollars.

Just by interchanging Chocolates with Crude Oil, Xiomia currency with INR, 100 currency note as single USD, one could pretty much understand  this currency valuation process at least at the top level given that it is even more complex.