Bitcoin is the worlds first decentralized digital currency. The digital part is self-explanatory. The term decentralized means that there is no central authority like the Federal Reserve in the U.S.A or The Reserve Bank in India, that is in charge of Bitcoin. There is no authority that sets the price/value of Bitcoin, production and supply rate etc, for Bitcoin.
So a question arises, How is the value of Bitcoin determined?
The value of Bitcoin is determined entirely by the forces of supply and demand. There is no 3rd party involved in a transaction (miners are different case). This is the beauty of decentralization.
More the demand, more the price/exchange rate rises, as simple as that.