Although there are many factors affecting the value of currency for a given country relative to others, there are still the same fundamental laws of economics of supply and demand that can be applied to this asset class. If the demand for a given currency increases this implies its value will go higher thus increasing its price relative to other currencies. The opposite is true if there is too much supply of currency of a given country in its economy. These are just a few variables that affect FX rates by no means this is an exhaustive list:
- Each countries’ level of Gold in Reserve
- The amounts of the Imports coming in and the Exports going out of the country
- The level and amounts of foreign investment that the country receives
- The inflation levels in the economy
- The amount of the public debt
- Political stability and governmental policy
- Interest rates imposed by the Central bank in the particular country
- Current Account deficit that the country runs in other terms the balance of payments
- Unemployment rates
On the basis of changes in a number of these factors we see how the US dollar has appreciated against the Swiss Franc or alternatively said the Swiss Franc has b…
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