Freely floating rates of exchange are defined by unobstructed game of a supply and demand. We will consider a course, or the price on which, say, the American dollars can be convert for the British pounds sterling by forex broker. Falling demand for pounds specifies on forex trading that if the pound becomes less expensive to Americans also the British goods for them become cheaper. It forces Americans to expand demand for the British goods and, hence, for pounds with which help it is possible to buy these goods. The offer of pounds falls, because as the price of pound expressed in dollars raises, British have a propensity to buy more than the American goods. The reason, of course, consists that at more and more high prices for pounds in dollars Englishmen can receive more than the American dollars and consequently more than the American goods for each pound. Thus, the American goods become cheaper for British that stimulates them to buy more than the American goods. Buying the American goods, they deliver pounds on the currency market as for acquisition of the American products they should exchange pounds for dollars. The supply and demand point of intersection for pounds will define the pound price in dollars. The rate of exchange established by free market forces, can change and really changes. When the pound price in dollars increases, say that dollar cost has gone down or the dollar has depreciated in relation to pound. More generally currency depreciation means that for purchase of one unit of any foreign currency it is required more units of national currency. If the dollar depreciates in relation to pound the pound concerning dollar rises in price and on the contrary. What forces are capable to cause rise in price and dollar depreciation?

Let’s consider some of the most important factors: - Changes in tastes of consumers. Any changes in tastes and attachments of consumers to products of other country change a supply and demand to currency of this country, and also change the rate of exchange. For example, if technological achievements of Americans in manufacture of computers do their technics more attractive to the British consumers and the industry they, buying more than the American computers, will put more pounds on the currency markets, and the dollar exchange rate will raise. And on the contrary, if the English tweed becomes more popular in the USA demand for pound increases also a dollar exchange rate will decrease. - relative changes in incomes. If growth of the national income of one country overtakes growth of this indicator in other countries the course of its currency, most likely, will decrease. Country import is in direct dependence on level of its income. For example, in process of increase of incomes in the USA the American consumers begin to buy more than the domestic and foreign goods. If the economy of the USA quickly extends, and the British economy стагнирует the American import of the British goods and, hence, demand for pounds will grow in the USA. The pound price in dollars will raise that means dollar depreciation. - relative change of the prices. If level of the internal prices quickly grows in the USA, and in Great Britain remains invariable the American consumer will search for rather cheap British goods, thereby increasing demand for pounds. And on the contrary, British will be less inclined to get the American goods, reducing the offer of pounds. This combination of growth of demand and falling of the offer of pounds will cause dollar depreciation. - relative real interest rates. Let’s assume, Soedi-nennye States with a view of inflation bridling begin to pursue a policy of “expensive money” as that was, for example in the end of 70 - the beginning of 80th years. As a result real interest rates - the interest rates corrected taking into account rates of inflation - have risen in the USA above, than in other countries. Soon the British private persons and firms were convinced that the USA has turned to very attractive place for an investment of financial assets forex market. This increase in demand at the American financial actives meant expansion of the offer of English pounds and consequently dollar cost has increased.

- Gamble. We will assume, it is expected that the American economy begins to grow faster, than British; Great Britain will face stronger inflation, than; will have lower real interest rates, than Great Britain. These forecasts allow to hope that in the future the dollar exchange rate will decrease, and a pound course, on the contrary, will raise. Hence, holders of dollars will try to translate them in pounds. This exchange, certainly, will cause a dollar rate decrease and increase of a course of pound. Too most occurs and actually. Dollar depreciation, and pound rise in price occurs so far as as speculators in the actions recognise that these changes in cost of currencies really will occur.