Drivers of Currency Rate?

Forums: Finance, Currency, Economy, Economics, Monetary Policy
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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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@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.

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@BonnieArteaga,

Spot on! Simply put, it's about supply and demand. That's Econ 101.

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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

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Drivers of Currency Rate?

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