What is the primary factor that determines currency exchange rates in the foreign exchange market?

The primary factor that determines currency exchange rates in the foreign exchange market is supply and demand. When more people want to buy a currency, its value goes up because it is seen as more desirable. Conversely, if many people want to sell that currency, its value goes down due to increased supply. For example, if a lot of tourists travel to Japan and need Japanese yen, the demand for yen will increase, raising its exchange rate against other currencies like the dollar. Overall, the balance of buying and selling activities in the market directly influences how much one currency is worth compared to another.