why do currency rise and fall ?

Answer 1

The reserve gold in the exechquer and international currency on hand and likely to be received for exports and money to be given to other countries for imports decide the rise and fall of a country's currency. This will be the equivalent money for the local currency printed and kept in circulation and hence has to necessarily vary in value, or rise and fall.
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Answer 2

It is supply and demand forces that cause the value of currency to change.This could be the price of that currency relative to other currencies (exchange rate) or the value of of a local currency as measured by the CPI. Inflation can be a good determinant too of the change (usually a fall) in the real value of a currency.

Answer 3

In simple terms: Supply and Demand.

Why would there be demand for currencies? A couple of reasons...

1) Business with foreign partners. You need to pay in local dollars. Therefore, a rise in Exports could cause the value of your currency to rise. (people selling foreign dollars to get local dollars to buy your stuff)

2) Carry Interest and Hot Money. Different countries pay out different interest rates for currencies or government bonds. Once a country experience a rise in interest rates, it becomes a better investment and money flows in, creating demand.

3) News Shock. Currencies are pieces of paper issued by the government to guarantee ownership of certain amount of assets. (used to be gold and silver) If a country is undergoing turmoil, investors might lose confidence in its currency and thus result in a fall in demand.

In short, Supply and Demand. :)

Answer 4

The value of a currency can be viewed from a domestic as well as an international perspective. Domestically, we use measures such as the Consumer Price Index (CPI) to measure changes in the purchasing power of the dollar over time. When the CPI increases, we say that the dollar is buying less — the value or purchasing strength of the dollar is going down. If the CPI is relatively stable, we say that the value of the dollar is stable. For some products with falling prices, we can even say that the purchasing power of the dollar is increasing.

Even when the dollar may be stable domestically, the value of the dollar could rise or fall as measured by another country's currency. In those cases, a currency is a commodity. It is something that has a price and is bought and sold to be used. The medium of exchange used to purchase this commodity is the currency of another country. The dollar, in that perspective, is purchased by foreign citizens who will, in turn, use it to purchase U.S. goods and services or dollar-denominated assets such as Treasury securities, corporate or municipal bonds, or stock.

An interesting aspect of foreign exchange is that a currency may be strengthening but still may not be strong relative to its historical position. For example, if the dollar were to rise from 85 yen to the dollar to 88 yen, it is strengthening. However, because the dollar historically is worth more than 100 yen, it is still not "strong." Likewise, a dollar that falls to 175 yen from 185 yen is weakening, but certainly not weak by historical comparison.

Answer 5

Currencies are quoted as a ratio. Aud/Usd or Eur/Dlr or Gbp/Dlr. Stocks are quoted as absolute figure. Whereas currencies is a ratio. The relative value of 2 items really.The rest is demand and supply.

Answer 6

There is any number of reasons: balance of payments, inflation, interest rates, yield curve slope, demand for local assets from international investors...

Answer 7

demand in the market. Heres a good site.