What are causes of exchange rate fluctuations?

Causes of exchange rate fluctuations:

- short term - changes in the demand and supply of the currency in the FOREX markets. (mainly due to speculations).

- longer term - exports, imports, capital flows - that are based on differences in countries:

rates of inflation

interest rates

rates of economic growth

labour productivity

measures of international competitiveness

Answered by Julia R. Economics tutor

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