What are other currencies that will be good to invest in?

You're unlikely to be able to invest easily in the Dinar, as it's a sanctioned currency that hardly anybody trades. Remember that investing in currenices is simply a gamble like any other. Depends what currency you're starting with also. But for currency speculation, remember it's the opposite of stocks – you want to buy when the exchange rate it high, and sell when it is low.

What happened to the value of the various European currencies as the deadline for handing them in approached? Did they approach zero?

I do not think they change much because there was a transition period during which they circulated along side the Euro. How every before the Euro was used as a currency it was used for international transaction and sold at a discount. So you could say the the values of the currencies fell vs the Euro, but not the $.

I want to find a book (or any resource – online or hard copy) that explains the fundamentals of how currencies work? I am looking to understand from the basics of how currencies fluctuate relative to each other, what they depend on, etc.

I have never seen a book on the subject, but the fundamentals are not very complicated.

Money flows from country to country on a daily basis based on the relative rates of interest in those countries. If the UK is paying 6% and the US is paying 4%, money will flow from the dollar to the pound and the pound will appreciate relative to the dollar. If the opposite is true, the opposite will happen.

Relative exchange rates are short term and have almost nothing to do with the basics of each economy — the money will arrive today and go somewhere else tomorrow (which is why it is sometimes called "hot money").

So, to take a simple example, the US entered the recession first and dropped its interest rates to almost zero. Other countries were still at 3 or 4% but the recession had not reached them.

So, interest rates in the US could not drop further, but those in other countries were almost certain to drop to mitigate the effects of the recession which was coming.

So, the smart money thinks: As other currency returns drop relative to the dollar (as they have to do), the dollar will strengthen against them (even though it is weak at the moment).

Not very complicated. Of course, other effects such as fear — everyone runs to the dollar when things are bad because it is financially and politically strong —- can distort the equation for a while as it has done in the past few months. But these effects will disappear with time and the fundamental mentioned above will reassert themselves.

To summarize again, exchange rates are short term and only reflect what is happening right now with respect to interest rates. As such, they can change pretty rapidly.