Drivers of Currency Rate?

Tue 29 Jul, 2014 08:27 am

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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Mon 8 Sep, 2014 11:56 pm
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
Tue 9 Sep, 2014 12:18 am
Spot on! Simply put, it's about supply and demand. That's Econ 101.
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