Trading is a beneficial platform taken up by few people who have the basic interest in foreign exchange and commodities. It is nothing but the simple act of exchange which favors none but depends on the existing market and the rates prevailing in it. It might be beneficial to a few individuals at times while beneficial to the agencies dealing with this at times. Foreign Exchange or commonly known as Forex is where the governments, banks, traders and investors come closer to exchange their commodities, currencies and stocks and this is considered one of the most liquid markets with a regular turnover of close to $ 4 trillion/day.
Trading or foreign exchange is not everybody`s cup of tea. Not will every person be interested in this for it is highly speculative and there are always chances for you to fail if the xglobal markets trends and movements are beyond your expectations. There are many factors that affect the foreign exchange market and act as a very powerful force making the prices go down badly or shoot up very high. The basis for all this is the economic changes that influence the demand and supply of commodities, stocks and currencies from time to time in a country. Let`s now take a look at some of the other very common factors that might have a severe impact on the foreign exchange market unimaginably.
Country`s economy – a country`s market is determined by its economic situation. If the country is in the growing phase the economy flourishes and the currencies start going high in their value and importance. On the other hand, when there is inflation, the economy is facing a very tough time, struggling to overcome the situation and hence the value of currency falls down badly. Now again this bad shape and state of a country is due to several reasons like
Natural disasters – when there is a flood or drought in a country, it affects the currency values. There is a negative impact on the society wherein the general public restricts their spending and tries to use whatever is available for the dire necessities. The government also tries to concentrate more on the relief activities spending more on this rather than the development activities.
These are a few listed here apart from which there are many other factors acting for and against the economy depending upon the situations. Foreign exchange is all about how a country is able to establish stronger relationships with the other countries through the exchange of commodities, stocks and currencies. When a country is able to do this properly without a hindrance, it becomes a good sign for the growth and development of the flourishing economy. These two are actually inter-dependent. When the economy is in the pink of its health, it will be able to make international trade and when there is stronger and healthier trades internationally, it improves and uplifts the economy`s status and existence. So if there is a problem with one, it would affect the other and vice-versa.
Without a miss it is also important to mention how political changes and factors bring about a change in the foreign exchange of a country`s economy. Any political unrest might lead to less cash flow into the country thereby making its international market poor with bad currency rates. This has a direct impact on the market. Similarly when there is an election or change in the government set-ups or leadership, there comes a change in the political set-up which in turn affects the international trading set-up.
So nothing can be pin-pointed as the definite reason for a change in the economic state of a country since there are many factors affecting it in turn affecting its Forex trading.
There are many factors that affect the foreign exchange market and act as a very powerful force making the prices go down badly or shoot up very high. The basis for all this is the economic changes that influence the demand and supply of commodities, stocks and currencies from time to time in a country.