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Drivers of Currency Rate?

 
 
Reply Tue 29 Jul, 2014 08:27 am
Hi!

I'd like to know more about the drivers of currency rates.

What are the key factors that affect the currency rates of a particular country? Such that it will appreciate or depreciate against another currency?

I believe interest rates is one. When interest rates for Country A are too high relative to Country B, the currency of Country A will depreciate against Country B. Is this correct?

What else affects the currency rates?

And how can a country control its currency rate? I believe this would be through its central bank?

Any comments are appreciated.

Thank you

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Type: Question • Score: 0 • Views: 827 • Replies: 4
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BonnieArteaga
 
  1  
Reply Mon 8 Sep, 2014 11:56 pm
@NewToEcons,
The following factors are responsible to influence the currency rate:
Medium-term cycles, Differentials in Inflation, Differentials in Interest Rates, Current-Account Deficits, Public Debt, Terms of Trade, Political Stability and Economic Performance.
cicerone imposter
 
  1  
Reply Tue 9 Sep, 2014 12:18 am
@BonnieArteaga,
Spot on! Simply put, it's about supply and demand. That's Econ 101.
0 Replies
 
Glennjacobs
 
  0  
Reply Thu 20 Nov, 2014 05:34 am
Factors That Affect Currency Values:
Gross Domestic Product (GDP)
Retail Sales
Industrial Production
Consumer Price Index (CPI)
0 Replies
 
RonaldHarris
 
  0  
Reply Thu 20 Nov, 2014 06:15 am
Here are some factors that influence exchange rates:
Differentials in Inflation
Differentials in Interest Rates
Current-Account Deficits
Public Debt
Terms of Trade
Political Stability and Economic Performance
0 Replies
 
 

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