These factors greatly affect the exchange rate of its bitcoin:
- Factor 1: Difference in Inflation
As a general rule, a country with a low inflation rate will have increased monetary value as its purchasing power increases relative to other currencies. Countries with higher inflation often find their currency values ​​lower than their trading counterparts.
- Factor 2: Interest Rate Difference
By adjusting interest rates, central banks affect both inflation and exchange rates. Higher interest rates make it possible for lenders to have higher returns than other countries. However, if the nation's inflation is much higher than other countries can reduce their monetary value. The opposite is the same.