DEMO — development content for layout testing. Not real editorial reporting.
DEMO content for development and layout testing — not real editorial reporting.
In a floating regime, a currency’s price is set in foreign-exchange markets by supply and demand. Exporters selling abroad and foreign investors buying local assets both create demand for the currency.
How it works
Interest-rate differentials matter because investors seek higher returns; so do inflation expectations, which erode a currency’s purchasing power over time.
Currency values reflect a tug-of-war between trade, investment and policy expectations. Here are the main forces at work.
What to watch
Some countries manage or peg their currencies, using reserves and policy tools to limit volatility. Each regime involves trade-offs between stability and monetary independence.
Key concepts
- Currencies
- Exchange rates
