Exchange rates play a crucial role in the global economy. They not only affect trade and investment, but also serve as key indicators of a country's economic health. Understanding the various types of foreign exchange can thus help investors make informed decisions in the complex international market. This article will introduce different types of currencies and their characteristics, as well as how to take economic cycles as a reference for investing in foreign exchange, providing readers with a comprehensive overview of global foreign exchange investment.

Three Common Factors Affecting Exchange Rates:

I. Monetary Policy and Interest Rate Differentials:

  1. When a country tightens its monetary policy and reduces its currency supply, the currency's value appreciates. Conversely, loosening its monetary policy causes its currency's value to depreciate.
  2. Tight monetary policy, often with interest rate hikes, can increase capital and currency demand, leading to appreciation. Conversely, loose monetary policy with rate cuts can decrease capital and demand, causing depreciation.

II. Economic Conditions:

When there is a disparity in economic conditions between two countries, the country with better economic conditions can attract more capital, driving up currency demand and resulting in appreciation. Conversely, the

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