Ultimately the government sets exchange rates. If a government wants to increase or decrease the value of their currency then they can. Interest rate decisions, unemployment rates, inflation reports, the gross domestic product, and manufacturing information may all lead to a decision to increase or decrease the rate but governments make the ultimate decision and it is increasingly not based on real economic situations but merely money manipulation.
This results in a built in bias to want to keep the exchange rate low so that you can compete with other governments who have artificially set their exchange rates lower than necessary. A favorable balance of trade is the desired result and if the value of your currency is too great then your balance of trade will suffer.
You can be a very honest government balancing the budget, equitably distributing the wealth in your country, and producing quality goods but if you need to trade internationally to survive financially then you will need to manipulate your currency to your personal detriment and open yourself up to international competition of cheaply produced goods thus impacting the quality of what you produce at a relatively expensive honest rate.
International big money governments who are not balancing their budgets and devaluing their currency artificially are unjustly determining the overall worldwide exchange rates unjustly. This is why the BRICS nations which include major players such as China, Russia, and India are always threatening to form their own currency with an appropriate exchange rate which more honestly reflects their economic power in the world.
The US dollar is not respected in the world as much anymore because there is massive counterfeiting of money going on and giving an unfair advantage to the US who is irresponsibly running its own economy and effectively not paying their fair share for financial irresponsibility.
The only just solution to predatory unjust currencies is a worldwide currency free of inflation which forces governments to balance their budgets and not artificially increase or decrease the value of money in their respective countries.
With a stable money supply which does not lose its value over time the world would become a more just place to live in and the thrifty and economically responsible nations would benefit at the expense of the inefficient unjust countries with corrupt governments. To eliminate worldwide corruption in the long duration you unfortunately need an uncorrupted money supply which is justly distributed worldwide.
The international money banking system is corrupt and continuing to corrupt the nations of the world. Until there is an inflation free currency worldwide corruption will not end and imminent bankruptcy and financial instability will dominate world economics and the economies of most nations on into the foreseeable future.
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