i have a few questions on the fundamentals of currency markets.
how does inflation affect the price of currencies and why?
The US runs a trade deficit, how does it get away with this?
How does an increase in the demand for a currency make exports less competitive?
why do some countries fear the strengthening of their currencies?
Hope thats not too many 
I am going to take a shot at my fundamental economic understading. Please seek a second opinion.
1 - inflation is controlled by interest rates and interest rates are what fundamentally moves a currency. If inflation is increasing then interest rates are raised which leads to a higher valued currency. this is because that currency becomes a more attractive investment compared to the alternatives.
2 - by issuing more debt however it cannot last at this rate forever. i think the reason there has not been more of an effect is because foreign investors have remained confident in the USD and continue buying T-bills inspite of this.
3 - an increase in demand means the currency will increase in value. now the products cost more for the importers. if the product costs more to import then the demand will decrease
4 - as the currency strengthens the cost to importers also increases. which means that the demand will of these exports decreases. so for countries that are dependent on exports this is undesirable
Being new to forex also, my answers will be only very limited.
inflation decreases the value of a currency because you need more of that currency to buy the same thing. Simply because the more you have of a certain currency, ie the USD, the less it is worth if the demand doesn’t increase.
Most industrialised countries have huge debts, but they get away with it . Don’t ask me why.
Let’s take the CAD for example. If the demand for the CAD increases, its value will increase. If its value increases the manufacturers in Canada will have trouble selling their products because the other countries will have to pay more for it, since the CAD is worth more. Therefore it husrt exporting.
A too strong currency can put the country’s manufacturing business in trouble, because it’s harder for them to export thier products AND products from outside are cheaper. That’s why some countries used to have or still have certain policies of protectionism. This situation is actually happening in France, where Airbus planned their budget based on an EUR/USD rate of 1,35, and it’s now hit the 1,45-1,50 area.
so if a country feels its currency is too strong, the central bank could lower interest rates thus increasing inflation and making the currency less attractive to investors?
As HROP said, inflation represents currency devaluation. That’s it’s basic definition. It is not controlled by interest rates, though they can influence it.
- The US runs a trade deficit, how does it get away with this?
If you look back through time you will see that the more wealthy countries have always been major importers of goods and lessor exporters, at least partly because the less wealthy countries do not have the ability to import from them.
- How does an increase in the demand for a currency make exports less competitive?
It’s not the demand for a currency which makes exports less competitive, it’s a rise in the exchange rate of the currency. As a currency appreciates against others the cost of the goods it exports rises, making them less attractive to potential importers.
- why do some countries fear the strengthening of their currencies?
See #3.
so if a country feels its currency is too strong, the central bank could lower interest rates thus increasing inflation and making the currency less attractive to investors?
No country will voluntarily raise inflation, unless it’s in a deflationary environment. Also, there is no direct link between interest rates and inflation. Central banks raise interest rates in an attempt to slow down growth to ease inflationary pressures, but that doesn’t mean it actually works.
Lowering interest rates will directly impact the demand for a currency not through any inflation impact, but because doing so reduces the rate of return for the currency. That could make others more attractive (assuming they aren’t also cutting rates), resulting in a decline in the exchange rate.
Thanks, i understand a whole lot better now