{"id":1258,"date":"2026-01-05T08:16:54","date_gmt":"2026-01-05T08:16:54","guid":{"rendered":"https:\/\/kensmartips.com\/finance\/?p=1258"},"modified":"2026-01-05T08:16:54","modified_gmt":"2026-01-05T08:16:54","slug":"how-exchange-rates-are-determined","status":"publish","type":"post","link":"https:\/\/kensmartips.com\/finance\/?p=1258","title":{"rendered":"How Exchange Rates Are Determined"},"content":{"rendered":"<p><iframe loading=\"lazy\" width=\"480\" height=\"270\" src=\"\/\/www.youtube.com\/embed\/-7ZSav8xvMU\" frameborder=\"0\" allowfullscreen><\/iframe><\/p>\n<p>The prices of currencies are one of the most tricky subjects in economics. When will a currency appreciate, and when will it depreciate? <\/p>\n<p>LEARN ECONOMICS<br \/>\n\u25b3 Industrial policy masterclass at: https:\/\/school.moneymacro.net\/<\/p>\n<p>WANT TO HELP ME PRODUCE MORE CONTENT LIKE THIS?<br \/>\n\u25b3 Liked the in-depth research and want to help me do more? Consider buying me a coffee at https:\/\/ko-fi.com\/moneymacro<br \/>\n\u25b3 For some extra benefits consider supporting me longer term on: https:\/\/www.patreon.com\/moneymacro<\/p>\n<p>5 BOOKS THAT INSPIRED THIS CHANNEL<br \/>\nThe Narrow Corridor: States, Societies, and the Fate of Liberty: https:\/\/amzn.to\/3gr6pSV<br \/>\nMoney Changes Everything: How Finance Made Civilization Possible: https:\/\/amzn.to\/3mt3xbY<br \/>\nAdaptive Markets: Financial Evolution at the Speed of Thought: https:\/\/amzn.to\/3sCkS3a<br \/>\nHouse of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again: https:\/\/amzn.to\/3gqXNeZ<br \/>\nThe Third Pillar: How Markets and the State Leave the Community Behind: https:\/\/amzn.to\/382Agwo<\/p>\n<p>Of course, this depends on supply and demand in foreign exchange markets. But, what determines this? There are two major theories in economics that try to explain this. The first is purchasing power parity and the second is interest rate parity. In this video, I discuss both as well as highlight the role of arbitrage and expectations. <\/p>\n<p>Want to know more? Watch the video, or read it all in the script here: https:\/\/www.moneymacro.rocks\/blog\/<\/p>\n<p>Narrated and produced by Dr. Joeri Schasfoort (University of Cape Town)<br \/>\n<a class=\"twitter-timeline\" data-width=\"500\" data-height=\"750\" data-dnt=\"true\" href=\"https:\/\/twitter.com\/JoeriSchasfoort?ref_src=twsrc%5Etfw\">Tweets by JoeriSchasfoort<\/a><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\nhttps:\/\/www.linkedin.com\/in\/joeri-schasfoort\/<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The prices of currencies are one of the most tricky subjects in economics. When will a currency appreciate, and when [&hellip;]<\/p>\n","protected":false},"author":0,"featured_media":1259,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1258","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kensmartips.com\/finance\/?p=1258\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Exchange Rates Are Determined - FINANCE\" \/>\n<meta property=\"og:description\" content=\"The prices of currencies are one of the most tricky subjects in economics. 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