The balance of payments is a comprehensive reflection of a country's foreign economic activities and has a direct impact on the changes of a country's currency exchange rate. Moreover, from the perspective of foreign exchange market transactions, international trade in goods and services constitutes the basis of foreign exchange transactions, which also determines the basic trend of the exchange rate.

2. The difference of inflation rate.

Inflation is a long-term, major and regular factor affecting exchange rate changes. Under the condition of paper money circulation, the ratio between the currencies of the two countries is basically determined according to the comparative relationship between the values they represent. Therefore, in the case of inflation in a country, the value represented by its currency will decrease, its actual purchasing power will also decrease, and its foreign exchange rate will also decrease.

3, the difference of economic growth rate

Other things being equal, when a country's economy grows at a high speed and investment opportunities increase, it will attract a lot of foreign investment, making its currency stronger and its exchange rate rise. This will increase the country's demand for foreign goods and services, so the country's demand for foreign exchange tends to increase relative to its available foreign exchange supply, leading to a decline in the currency exchange rate.

4. Interest rate difference

Interest rate will affect the attractiveness of a country's financial assets. The rise of a country's interest rate will make its financial assets more attractive to domestic and foreign investors, which will lead to the inflow of capital and the appreciation of exchange rate. Of course, we should also consider the relative difference between one country's interest rate and that of other countries. If one country's interest rate rises, but other countries also rise by the same amount, the exchange rate will generally not be affected. If one country's interest rate rises, but other countries' interest rates rise faster, then this country's interest rate will fall relatively, and its exchange rate will tend to fall.

5. Financial revenue and expenditure

The government's fiscal revenue and expenditure are often used as the main indicators of the country's currency exchange rate forecast. When a country has a fiscal deficit, whether its currency exchange rate rises or falls mainly depends on the measures chosen by the government to make up for the fiscal deficit.

6. Psychological expectation factors

In the foreign exchange market, whether people buy or sell a certain currency has a lot to do with traders' views on the future. When traders expect that the exchange rate of a currency may fall in the future, in order to avoid losses or gain extra benefits, they will throw out a lot of this currency, and when they expect that a currency may rise in the future, they will buy a lot of this currency.

7, government intervention factors

Exchange rate fluctuations will have an important impact on a country's economy. At present, governments (central banks) often intervene in the foreign exchange market in order to stabilize the foreign exchange market and maintain healthy economic development.