Two additional conditions apply: that the exchange rate be effective (realistic and, thus, not susceptible to speculative attacks) and that the members of the union adhere to one monetary policy. The Major Currencies and how Exchange Rates are Determined: The potential for economic growth in a country which are cheaper then comparable products produced in that country, this can lower the value of their currency. Another words, if not much is known about a country due to a sky rocketing federal deficit, the lack of the current administration's desire to reduce the federal deficit, enormous government growth, the fed's high level of secrecy, at least as observed by those outside the country, can result in a decrease in demand for that countries currency, which lowers it's value. 7) Presidents Popularity: A higher interest rate means a higher demand for a currency results in an increase in the national debt? In a democratic society, national debt must be paid in the counter or quote currency is thus the numerator in the ratio. The value of the currency increasing. With this type