[The Saucepan Man]

I imagine that there would be a fair amount of trade in ME, with the level of trade activity probably varying depending upon the safety of the trade routes, ie the level of orc, troll, dragon etc activity.

We know that there was trade between the Elves of Thranduil's realm and Lake Town at the time of the Hobbit. Prior to Smaug's appearance at Erebor, and following his death, Dwarves and the Men of Dale participated in this trade too. Also, there was no doubt trade between the Shire and other realms. Pipeweed was cultivated in the Shire, but pipe smoking does not appear to have been restricted to that land. For example, Gimli enjoys a good smoke at Isengard and is clearly no novice smoker, having had a pipe but lost it in Moria.

I doubt that these recorded instances of trade activity were isolated. It is in the nature of realms that, unless at war, they will trade. No doubt there was trade between Rohan and Gondor (in horses for example) and also between the separate provinces and towns of Gondor. Also, its unlikely that Rivendell was self-sufficient, and so it would probably have needed to trade with other realms. The only exception (amongst the "free peoples") was probably Lothlorien, which was an isolated and reclusive community (clearly, given its reputation, there was no trade between Lothlorien and Gondor or Rohan).

The fact that coffee was available in the Shire also suggests that there was some trade with realms further south, since coffee is a crop which grows only in tropical climes (although so does tobacco in our world, and yet it grew in the mild climate of the Shire in ME, so we cannot necessarily apply our own world view in these matters).

Of course, it does not follow from the existence of trade that any form of currency existed in ME. Goods could be bartered. But there is some evidence for the existence of currency. The auction involving Bilbo's furniture has been mentioned, and auctions tend to involve goods being exchanged for currency, rather than bartered for other goods. Also, the Trolls that Bilbo and the Dwarves encountered had a purse, the purpose of purses generally (although not exclusively) being to carry coinage, and their hidden horde included pots of gold coins.

I doubt that a society as complex as that of Gondor could function without some form of currency. And it seems that the Shire probably had some form of currency too. I hardly imagine, however, that there was any form of exchange rate between currencies of different realms. Possibly, there was a universal currency, perhaps consisting of gold, silver and copper coins, although that raises the question of where they were minted. Could anyone with access to the relevant precious metals and the necessary technology have minted coins which would be acceptable elsewhere in ME? It seems more likely to me that realms which operated on the basis of currency would develop their own currency, signifying the coinage as their own by impressing upon it the likeness of their ruler. I would therefore speculate that some (although not necessarily all) realms did have some form of currency of their own. However, it is likely that trade between different realms mostly took place by barter.