Why Do Currencies Fluctuate?
Exchange rates change due to a multitude of economic and political conditions. Most important are inflation, interest rates, and political stability. Rates can also be affected by supply and demand of the currency itself. Currencies function as traded commodities.
Currencies are bought and sold. Travelers do it on a small scale whenever they are planning for a trip to another country. Banks have been doing it for years as a means to make money on the differences between currency exchange rates. Governments do it in an attempt to influence their respective economies.
Currency pairs fluctuate daily, in the regular currency exchange
markets, often around 1% or more. There is great potential for profits.
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