What are the primary factors that influence currency exchange rates in the global market?

Currency exchange rates are influenced by several key factors, including interest rates, economic indicators, inflation rates, political stability, market sentiment, and government debt. Higher interest rates attract foreign investment, which increases demand for a currency. Strong economic performance, like GDP growth, tends to strengthen a currency. Lower inflation leads to a stronger currency as purchasing power increases. Stable political environments also attract investment, boosting demand for the currency. Investor perceptions and speculations can significantly impact exchange rates, and high government debt may weaken a currency due to concerns about repayment capacity.