Eli5 what causes a currency to lose value?
In: 1
Supply and demand. One of the things that make something valuable is how rare it is. This applies to baseball cards, Pokémon, or vintage cars. It also applies to currency. If a central bank creates more money than is needed the value of that currency goes down. If it creates less than the value of money goes up.
Foreign trade can create more demand for a currency as well as demand for the currency as an investment.
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