Including trade account and capital account.

When a country's balance of payments is in deficit, the demand for foreign exchange in the foreign exchange market exceeds the supply, resulting in the appreciation of foreign exchange and the depreciation of the local currency. On the contrary, when there is a surplus in the balance of payments, foreign exchange depreciates and the local currency appreciates.

2. Difference of inflation rate

When the inflation of a country is higher than that of other countries, it means that its currency depreciates internally and externally. This transmission mechanism is mainly realized through the following three ways: first, inflation makes the country's prices rise, leading to a decrease in exports, an increase in imports, a shortage of foreign exchange, a deficit in trade balance and a depreciation of the local currency; Second, inflation reduces the real interest rate of the local currency and the international status of the local currency, which leads to the outflow of domestic funds, increases the domestic demand for foreign exchange, reduces the demand for the local currency in the international market, and causes the capital account deficit and the depreciation of the local currency; Third, inflation shows that the intrinsic value of the country's currency has decreased, and people will expect that the country's currency will tend to be weak. For the purpose of preserving value, traders will sell the currency of the country, thus causing the currency of the country to depreciate.

3. Interest rate difference

When a country's economy is basically normal, domestic interest rate is higher than foreign interest rate, which will lead to capital inflow, oversupply of foreign exchange and appreciation of local currency; When the domestic interest rate is lower than the foreign interest rate, it will lead to capital outflow, foreign exchange shortage and local currency depreciation.

4. Government intervention

When the central bank buys a currency, it will increase the demand of the currency in a short time, thus appreciating; When the central bank sells a certain currency, it will increase the supply of the currency in a short time, thus depreciating. The central bank should establish a foreign exchange stabilization fund and reserve a certain amount of foreign exchange before intervening in foreign exchange. When the central bank's foreign exchange transactions are difficult to achieve the government's exchange rate policy objectives, the government can also use foreign exchange control to balance the exchange rate. Of course, other economic policies of the government will also indirectly affect the exchange rate.

5. Major international events

When a major international event occurs and benefits a country, its currency will appreciate; When major international events are unfavorable to a country, its currency will depreciate.

6. Psychological expectation

When people generally think that a currency will appreciate, even if there is no sign of appreciation before, people will buy a lot of this currency in the foreign exchange market for speculation, resulting in a shortage of this currency and thus appreciation; On the contrary, this currency may be artificially overspent, thus depreciating.