Exchange rates are constantly changing, influenced by various factors. Here’s a beginner’s guide to understanding what drives these fluctuations.
Key Points:
- Economic Indicators: GDP, employment rates, and inflation play a crucial role in exchange rates.
- Political Stability: Countries with stable governments often have stronger currencies.
- Global Market Trends: International trade and demand for currencies affect their value.
- Central Bank Policies: Interest rate decisions by central banks influence exchange rates.
- Speculation: Traders buying or selling currencies in large volumes can impact rates.
