Factor influencing the exchange rate to change

The magnitude of value that two kinds of currency represent actually is the foundation that the exchange rate determines, and under the influence of the following main factors, the exchange rate is being changed constantly.
(1)International revenue and expenditure: Among them the foreign trade revenue and expenditure play a decisive role to exchange rate change. The favorable balance of foreign trade, the exchange rate of the home currency rises; On the contrary, drop. The foreign trade revenue and expenditure influence the supply and demand of the foreign currency directly.
(2)Inflation: Have already concerned the value and purchasing power of the real representatives of currency directly, concern the foreign competitive power of the goods and psychological impact on the foreign exchange market again. The inflation is slowed down, the exchange rate of the home currency goes up; Drop on the contrary.
(3)The impact on flow of the capital of the interest rate level: Under certain condition, the high interest rate level can attract the international short-term inflow of funds, raise the exchange rate of the home currency; On the contrary low interest rate. U.S. dollar was strong in the first half of the eighties, i.e. the result implementing high interest rate policy of U.S.A..
(4)The exchange rate policies of various countries: Though exchange rate policy can't change the basic trend of the exchange rate, a country, according to the monetary tendency of this country, further take the drop which aggravates the exchange rate of the home currency or upward measure, its function is incomparable.
(5)Speculative activities: Especially the foreign currency speculative activities of the trans-corporation. Can make the fluctuation of exchange rate go beyond the nticipated rational range sometimes.
(6)Political event: The great political event happening suddenly in the world, have major impact to the change of the exchange rate too.
The relation of every factors described above is intricate: Various factors join together and have an effect at the same time sometimes; The specific factor works sometimes; The function of every factor, in order to offset each other sometimes; The main function of a certain factor, was replaced by another factor suddenly sometimes. Generally speaking, the international revenue and expenditure is the important factor of determining the basic tendency of exchange rate within relatively long time (such as one year); Inflation, exchange rate policy only play a subordinate toing role --Encourage or weaken the function that the international revenue and expenditure plays; Not only the comprehensive reflection of every factor described above of speculative activities, but also on the basis of exchange rate tendency that the state of the international revenue and expenditure determines, play a driving role, aggravate the fluctuating range of the exchange rate; By the look of recent years, under certain condition, the interest rate level also generates an important impact on exchange rate fluctuations of a country.