Question

What causes exchange rates to change?

Answer 1

Any change in imports or exports will certainly cause a change in the rate of exchange.

Step-by-step explanation:

If imports exceed exports, the demand for foreign currency rises; hence the rate of exchange moves against the country.

Answer 2

Country’s terms of trade improves if its exports prices rise at a greater rate than its imports. This results in higher revenue which causes a higher demand for the country‘s currency and increase in its currency’s value. (Hope this helps!) :)