What is exchange rate:
The exchange rate is the value of one currency compared to another. It tells how much one country's currency is worth in terms of another country's currency.
Here are some factors that affect the exchange rate:
Supply & Demand --- If more people want a currency, its value rises.If fewer people want it, the value falls.
Interest Rates --- Higher interest rates attract foreign investors, increasing demand for the currency.Lower interest rates make the currency less attractive, reducing its value.
Inflation Rates --- Low inflation strengthens a currency because its purchasing power stays stable. High inflation weakens a currency as it loses value faster.
Exports & Imports ---More exports bring in foreign money, strengthening the currency.More imports mean more spending on foreign currency, weakening the local one.
THE END