Factors that influence exchange rate

The world of Exchange can be a cold, chaotic and confusing place, no matter what your situation is, all of these concepts are important to understand because they help to clarify the inner workings of the mysterious business of exchange rate in any country.  

 Exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every economy in the world. For this reason, exchange rates are among the most watched, analyzed and govern mentally manipulated economic measures. But exchange rates matter on a smaller scale as well: they impact the real return of an investor's portfolio. Here we look at some of the major forces behind exchange rate movements.