Changes in the international and domestic political situation have a great influence on the exchange rate. When the situation is stable, the exchange rate is stable. When the situation is turbulent, the exchange rate falls. We need to pay attention to international relations, partisan struggles, important government officials, turmoil, riots and so on.

2, the impact of the balance of payments

The balance of payments is the total revenue and expenditure caused by all economic transactions between a country and foreign countries within a certain period of time (usually within one year). This is a record of economic exchanges between a country and other countries. The balance of payments is reflected in the balance of payments, which is compiled according to the double-entry bookkeeping principle.

3. Inflation

Inflation refers to the sustained and general increase in the general price level. The difference of inflation at home and abroad is the dominant factor that determines the long-term trend of exchange rate. In the case that the credit currency cannot be cashed, the ratio between two countries is determined by the value they represent. If the inflation rate of a country is higher than that of other countries, its currency will tend to depreciate in the foreign exchange market; On the contrary, it will tend to appreciate.

4, the impact of interest rates

The abbreviation of "interest rate" is the ratio of interest amount to loan principal in a certain period. The so-called interest is the reward of transferring monetary funds or the price of using monetary funds. The existence of interests divides profits into interest and income of business owners.

Therefore, we need to pay attention to the formulation of interest rate policies and interest rate fluctuations in various countries.

5. Market psychology

The psychological expectation of foreign exchange market participants seriously affects the trend of exchange rate. For the appreciation or depreciation of a currency, the market often forms its own views. When an understanding is reached, the exchange rate will change within a certain period of time. At this time, exchange rate fluctuations may be completely divorced from fundamentals or central bank intervention is ineffective.

Extended data:

cause

1, trade and investment

Importers and exporters pay one currency when importing goods and charge another currency when exporting goods. This means that they receive and pay in different currencies at the time of settlement.

Therefore, they need to convert some of the money they receive into money that can be used to buy goods. Similarly, a company that buys foreign assets must pay in the currency of the relevant country, so it needs to convert the currency of that country into the currency of the relevant country.

Step 2 speculate

The exchange rate between the two currencies will change with the change of supply and demand between the two currencies. Traders can make a profit by buying a currency at one exchange rate and then selling it at another more favorable exchange rate. Speculation accounts for the vast majority of transactions in the foreign exchange market.

Step 3 hedge

Due to the exchange rate fluctuation between two related currencies, companies (such as factories) with foreign assets may suffer some risks when converting these assets into their own currencies. When the value of foreign assets denominated in foreign currency remains unchanged for a period of time, if the exchange rate changes and the value of such assets is converted into domestic currency, there will be gains and losses.

Companies can eliminate this potential profit and loss by hedging. This is the execution of a foreign exchange transaction, and the transaction result just offsets the gains and losses of foreign currency assets brought about by exchange rate changes.

Baidu encyclopedia-foreign exchange rate