Eli5 what causes a currency to lose value?
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Basically it comes down to supply and demand. As the supply goes up (more money is minted), the dollar that you have is now worth less as there are more total dollars. This happens as the government prints more money which is known as inflation.
If one currency is experiencing significant inflation compared to another, then the relative values of each country’s currency will also be affected.
In a global context, exchange rates are based on several factors but most simply its based on supply and demand as well. If you think of the US Dollar as apples and the Euro as oranges and everyone is tired of apples and they want oranges (immigration to Europe/business in the EU as a few real world examples) then the trade rate might go from 1 apple = 1 orange to 2 apples = 1 orange.
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