The Factors that determine exchange rates is>>(in short)
1) Gold Reserves- Country that has enough gold is more strong)
2) Import/Export- If Country doing more Import,they pay in their currency and that currency get strong so more export more strong the countries currency.
3) Foreign Investments- Foreign investors investing in ur country>Selling their currency and buying ur currency>Investing>gaining profits.So ur currency appreciates.
4) Inflation- Lower Inflation Higher Currency Value
5) Public Debt- More Debt NO Foreign Investement because Ur Country has Already lots of debt and so lots of Defaulters.
6) Political Stability- Country with stable government will allow more foreign investors.(for stable rules,new government new rules,and so effecting foreign investors.