7-2-2014 Newshound Guru Millionday The
value of a currency is measured by its value relative to other currencies,
which is determined by supply and demand. “Demand” in this sense is actually understood as “velocity”, meaning the
amount and number of times a particular country’s currency notes circulate
within a set period of time. The faster a currency circulates, the more
valuable it is perceived due to verified consumer confidence. The trading relationship between two countries plays a major role in
determining the exchange rate between their two currencies. These factors include: inflation, interest rates,
current account deficits, public debt, terms of trade and political stability. The exchange rate of the
currency in which an investor’s portfolio holds the bulk of its investments is
a major determinant of that portfolio’s return. [post 2 of 2]
