What moves the currency rates?
A lot of reasons can have their hands behind the fluctuating
market and currency rates, and not one or two can be blamed for
any sort of rise or fall in them. Although it would not be
entirely wrong to say that the Forex market business is more or
less based on these fluctuations only. Traders trade in this
market, purchase and sell various currencies with the expectation
of making gains if the value of the exchange moves in their favor.
Now this sudden movement in the market can be caused by either
market news or current events all over the world, which have an
effect on the demand and supply of these currencies.
This law of demand and supply is what works well in this Forex
market too. When the demand of a particular currency goes up, its
market price also escalates as compared to the other currencies in
Similarly, if the demand of a particular currency goes down,
traders are no longer interested in holding it back with them, and
so the market price of the currency also decreases.
It is quiet obvious that the traders trading in currencies and
interested in exchange markets, will be equally keen and
interested in knowing about the overall economic development of
the countries whose currencies they hold, or are interested in
buying. Every trader wants to be convinced that they economy they
are about to invest in is developing with a solid and steady
growth, which can be known by studying various factors such as
unemployment, import and export, and the GDP statistics of a
Rise in Unemployment experienced by any particular country is
considered as a negative factor, whereas a fall in Unemployment is
always measured as a positive aspect.
Similarly, an increase in the GDP figures of a particular country
is considered as a positive feature, whereas a decrease in GDP
figures is always measured as a negative aspect.
Also, a mount in the Exports numbers of a particular country are
always considered as a positive trait as compared to the decrease
in Exports numbers which is looked upon as a negative aspect.
Lots of factors are responsible for determining the political
stability of a particular country. These factors can be any kinds
of alterations in government or by the government, rising
unemployment rates, elections or international and political
Every investor is cautious enough and considers all these factors
in his mind before going in for investing in a particular economy.
Any kind of Political conflicts, natural calamity or terrorism
attacks or wars are major contributors in making or marring the
economy of a country.
Around the world, interest rates are always followed by money. If
the interest rates of a particular country rise up, investors big
and small from all over the world would want to invest their money
with it in order to gain higher returns on their investments.
Mostly it can be said that if you want to capitalize on higher
investments, then you have to keep an eye on the rise and fall of
the interest rates in a particular country. And the factors which
will help you determine this rise and fall are mostly the
financial rise indicators in addition to the speeches of the
current leading, dominating and significant figures like big
politicians, iron and steel magnets and businessmen.
The interest rate movements generally take place during the
programmed meetings by the central banks like BOE, FED, ECB, and
An increase in the Interest Rates is always considered as a
positive factor for a particular country as compared to the
decreased in Interest Rates.