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A Comprehensive Forex Broker Register
A comprehensive forex broker list includes investment banks with dealing rooms, commercial banks with treasury operations, and online brokerages that serve a larger market. The investment banks with forex trading capabilities include Morgan Stanley,...
A Review of Automated Forex Brokers
"Several companies offer automated forex broker services. In the following articles, you'll find brief reviews of each.
What forex brokers offer automated services?
GFT Forex is an automated forex broker, whose DealBook FX 2 software...
Fundamental Analysis
Fundamental analysts use fundamental economic and political information (e.g. unemployment rates, economic policies, inflation, and growth rates) about the countries involved in the currency pairs they trade...
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Factors Influencing Currency Exchange Rates
The currency exchange rates between countries helps determine how much people pay for imported goods and services and how much they receive for what they export. When the value of the US dollar drops, imports to the US become more expensive, which tends to reduce the volume of US imports. Simultaneously, other countries will pay less for some US products and that will tend to boost US export sales. The exchange rate between two countries' currencies is particularly important if the two countries are heavily involved in trade.
It is enlightening to understand the factors that affect exchange rates.
These factors include supply and demand for that country's currency, interest rates, inflation, and investor confidence.
A country's exchange rate is typically affected by the supply and demand for that country's currency in international exchange markets. It is known as a floating exchange rate since it floats according to supply and demand. If demand exceeds supply, then the value of the currency will go up. If however, the supply of the currency exceeds demand, then its value will go down.
Several factors influence the supply and demand for a country's currency.
If the excess of interest rates over inflation is higher in one country than in other countries, then investors will tend to choose to invest in the country with the higher differential of interest rate over inflation, increasing demand for that country's currency. If the excess of interest rates over inflation is lower in one country than in other countries, then investors will tend to not choose to invest in the country with the lower differential of interest rate over inflation, decreasing demand for that country's currency. Thus the interest rate and inflation are key factors influencing supply and demand for a country's currency and its exchange rates.
Trade balance also has an affects currency exchange rates. There will be higher demand for the currency of countries that export much more than they import, to satisfy that imbalance. Similarly, there will be lower demand for the currency of countries that import much more than they export, because of that imbalance.
Investor confidence also impacts currency exchange rates. If investors are confident that a country's economy will be strong, they will be more likely to buy that country's assets, pushing up the the value of that country's currency. If investors are not confident that a country's economy will be strong, they will be less likely to buy that country's assets, pushing down the the value of that country's currency.
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