Currencies are basically commodities whose value is based on supply and demand.
Demand comes from other countries wanting to buy your currency (or things they need to pay for with your currency). For example, much global oil is priced in dollars, so if you want to buy oil you need to buy dollars. If you think the US dollar is a good place to park your foreign reserves, then you are buying dollars. Thinks the US stock or bond market, or real estate, etc, looks like an attractive investment, then you need to buy dollars.
If a country wants to boost the value of it's currency then they increase interest rates to make it more attractive to foreign investors, or reduce the supply by selling bonds (taking dollars out of the market).
So ... it's complicated. Supply and demand, but tons of factors that go into those.
Demand comes from other countries wanting to buy your currency (or things they need to pay for with your currency). For example, much global oil is priced in dollars, so if you want to buy oil you need to buy dollars. If you think the US dollar is a good place to park your foreign reserves, then you are buying dollars. Thinks the US stock or bond market, or real estate, etc, looks like an attractive investment, then you need to buy dollars.
If a country wants to boost the value of it's currency then they increase interest rates to make it more attractive to foreign investors, or reduce the supply by selling bonds (taking dollars out of the market).
So ... it's complicated. Supply and demand, but tons of factors that go into those.