What moves exchange rates, and what exchange rates move
Here is a list of what impacts the strength of a currency, as well as the impacts this strength has on the currency country(ies).
Things are of course more subtle than a simple excel list binary check. For example, some inflation is not automatically bad, it can be the sign of a country economic growth, and as it gets bad the relationship is not linear, inflation slightly high will not scare many investors and industrials, but when it gets to a really bad high value investors flee at an exponential rate which exacerbates the currency devaluation further.
Where the currency goes it is said depends on where "the big boys" want it to go, in particular central banks. Capitalist countries look to increase profits, Communist/socialist countries seem to also like manipulating their currency which they use for propaganda purposes, to increase their control, fulfill their goals, and to increase their competitiveness so they may improve the lives of "the workers".
But the "big boys" do not have full control. Ask the BOJ, ask the BOE governor from the early 90s.
Here is the example - without getting into the details - of a bad everything horror story (no you can not short it they have capital controls):
Another example, after the initial "safe haven" rally of the USD in March 2020 following the stock market crash, the dollar went into a big downtrend against European currencies:
And a final example, China, the biggest holder of usdollars, has been selling its bags (public information), and their economy did much better in 2020 than the US one, the price has been unsurprisingly trending for over half a year now:
Things are of course more subtle than a simple excel list binary check. For example, some inflation is not automatically bad, it can be the sign of a country economic growth, and as it gets bad the relationship is not linear, inflation slightly high will not scare many investors and industrials, but when it gets to a really bad high value investors flee at an exponential rate which exacerbates the currency devaluation further.
Where the currency goes it is said depends on where "the big boys" want it to go, in particular central banks. Capitalist countries look to increase profits, Communist/socialist countries seem to also like manipulating their currency which they use for propaganda purposes, to increase their control, fulfill their goals, and to increase their competitiveness so they may improve the lives of "the workers".
But the "big boys" do not have full control. Ask the BOJ, ask the BOE governor from the early 90s.
Here is the example - without getting into the details - of a bad everything horror story (no you can not short it they have capital controls):
Another example, after the initial "safe haven" rally of the USD in March 2020 following the stock market crash, the dollar went into a big downtrend against European currencies:
And a final example, China, the biggest holder of usdollars, has been selling its bags (public information), and their economy did much better in 2020 than the US one, the price has been unsurprisingly trending for over half a year now: