"Exchange rate", also known as "foreign exchange market" or "exchange rate", is the ratio of one country's currency to another, and the price of another currency is expressed in one currency. Because of the different names and values of currencies in the world, one country's currency should set an exchange rate for other countries' currencies, that is, the exchange rate. In the short term, a country's exchange rate is determined by the demand and supply of foreign currency. Foreigners buying their own goods, investing in their own countries and speculating on their own currencies will all affect the demand for their own currencies. Domestic residents want to buy foreign products, invest in foreign countries and speculate in foreign exchange, which affects their money supply. In the long run, the main factors affecting the exchange rate are: relative price level, tariffs and quotas, preference for domestic goods relative to foreign goods and productivity.

(1) Balance of payments. If a country has a surplus in its balance of payments, its currency exchange rate will rise; If it is a deficit, the exchange rate of the country's currency will fall.

(2) inflation. If the inflation rate is high, the country's currency exchange rate is low.

(3) interest rate. If a country's interest rate rises, the exchange rate will be high.

(4) Economic growth rate. If a country's economic growth rate is high, its currency exchange rate is high.

(5) fiscal deficit. If a country has a huge budget deficit, its currency exchange rate will fall.

(6) foreign exchange reserves. If a country's foreign exchange reserves are high, its currency exchange rate will rise.

(7) psychological expectations of investors. The psychological expectation of investors is particularly prominent in the current international financial market. According to exchange psychology, foreign exchange rate is the concentrated expression of subjective psychological evaluation of money by both foreign exchange supply and demand sides. If the evaluation is high and confidence is strong, the currency will appreciate. This theory plays a vital role in explaining countless short-term or extremely short-term exchange rate fluctuations.

(8) The influence of exchange rate policies of various countries.