There are many factors that affect exchange rate changes, mainly including:
1. A country's balance of payments: If a country continues to have a surplus, its foreign exchange income will increase and its international reserves will also increase. In the foreign exchange market, the balance of payments surplus shows that the supply of foreign exchange exceeds demand, which makes the currency exchange rate of the country rise, the currency value rises and the foreign exchange rate falls; The opposite is true.
2. Differences in inflation: If a country experiences inflation, the purchasing power of its currency tends to decline, and the foreign exchange rate of the starting currency declines, and vice versa. When inflation occurs in both countries, if the domestic inflation rate is higher than that in foreign countries, the local currency exchange rate will often fall. On the other hand, although there is inflation in China, the exchange rate of the local currency will tend to rise.
3. Spread: Generally speaking, rising interest rates will make the country's financial assets more attractive to investors, attract foreign capital inflows and raise the local currency exchange rate.
4. Foreign exchange intervention policy: In order to avoid the adverse impact of exchange rate changes on the domestic economy, the government often intervenes in the exchange rate, and the central bank buys and sells foreign exchange in the foreign exchange market, which is often beneficial to the country.
5. Market expectation psychology.
6. Foreign exchange speculation
7. Domestic and international economic, political or military emergencies.