when focusing solely on trade effects a trade surplus means there is high demand for a country s goods in the global market which pushes the price of those goods higher and leads to a direct strengthening of the domestic currency 
a trade surplus implies there is high demand from overseas for a country s goods and services which tends to push its prices up and contribute to a strengthening of the domestic currency trade surplus vs trade deficitthe opposite of a trade surplus is a trade deficit a trade deficit occurs when a country imports more than it exports a trade deficit typically also has the opposite effect on currency exchange rates when imports exceed exports demand for a country s currency is lower lower demand for currency makes it less valuable in the international markets special considerationswhile in most cases trade balances highly affect currency fluctuations there are a few factors countries can manage that make trade balances less influential countries can manage a portfolio of investments in foreign accounts to control the volatility and movement of the currency additionally countries can also agree on a pegged currency rate that keeps the exchange rate of their currency constant at a fixed rate if a currency is not pegged to another currency its exchange rate is considered floating floating exchange rates are highly volatile and subject to daily trading whims within the currency market which is one of the global financial market s largest trading arenas 