Anyone know what factors cause the foreign exchange rate to fluctuate.?

Answer 1

The economy in each country you are looking at the currency in. Our economy is bad and UK is good then the value of the dollar goes down. We used to compare the dollar to a loaf of bread. How many loafs of bread the dollar buys gives you an idea of how strong it is. If the UK's equivalent to the dollar buys 5 loafs of bread and the US dollar only buys 4 loafs of bread then the UK dollar is worth that much more than ours. If all of our bread makers start making $50.00 an hour and they were making $20.00 an hour then our bread price will go up and the dollar will buy less bread, say 2 loafs. Then if the cost stays the same in the UK then their money will retain it's value of 5 loafs of bread and they can buy more than 2 of our dollars with one of theirs. It is not this simple but that should give you an idea...

Answer 2

In the most basic terms, supply and demand.
What changes the supply and demand, monetary policy ie how much currency is printed, interest rates and exchange regulations if any. Other factors, trade balance, direct investment options, tax policy, etc.

Answer 3

like all different value, an substitute fee varies with furnish and insist. so if there's a unexpected improve interior the perceived power of an economic device, or good investment opportunities look, that's possibly that the call for for that economic device's distant places money will improve and hence the fee for that distant places money will improve: that's substitute fee will upward thrust. in addition if there is a few form of economic ask your self like the financial ruin of a significant economic business enterprise or company then that's possibly that the perceptions of that economic device might substitute into extra damaging and extra human beings might attempt to sell that's distant places money, this might improve the availability of that distant places money hence reducing that's value/substitute fee. Like something that's concerning the concept that shoppers and sellers have of the commodity. contained on the subject of distant places money, the fee relies upon completely on what is going on the place the distant places money is used and hence what can certainly be completed with the distant places money. if the standard of things being produced in an economic device is undesirable or the destiny economic outlook of an economic device seems stormy then that's possibly that the substitute fee for that's distant places money will fall.

Answer 4

Interest rates, growth rates of the economy and relative inflation rates.

Answer 5

Supply and demand

Answer 6

almost anything