#firstdealofthenewyearFateema * Interest Rate Differentials: Differences in interest rates between countries can significantly impact currency values. Higher interest rates tend to attract foreign investment, increasing demand for the currency and causing it to appreciate. * Economic Growth Prospects: Strong economic growth prospects generally lead to a stronger currency as investors seek to invest in that country. * Inflation: High inflation can erode a currency's value as its purchasing power decreases. Central banks often raise interest rates to combat inflation, which can strengthen the currency. * Political and Economic Stability: Political instability or economic uncertainty can lead to capital flight, causing a currency to depreciate. Central banks may intervene to stabilize the currency in such situations. * Market Sentiment: Central bank actions and statements can significantly impact market sentiment, influencing investor confidence and currency values.