The foreign exchange market, or ?forex,? is where the rate of exchange among two countries? currencies is calculated methodically. Forex greatly impacts the network of finance from the individual to the global society,
Being able to evaluate the current value of one currency pair is a steady method that can keep the global financial trade afloat, despite the many issues that can have an effect on a nation?s currency value.
Some factors, such as election of government figures in a country, can have an impact on that country?s currency worth, depending on how these figures are seen by the international public. Our website can tell you more about this:?IC Markets
A second factor is the trade of goods and services, and if a country tends to import more than export, their currency value is likely to suffer. Natural disasters can even cause a country?s currency value to plummet. If the products and services meant for export by a country are destroyed, the value of their currency will go down as well.
The rate of exchange among two countries can also be affected by the balance of trade. On a standard basis, this should stay inside a scope that is satisfactory for both countries. This will lead to a forex rate that will only experience small changes. If there is a rapid change in the trade balance, it would lead to a marked change in the forex rate, which will benefit only one of the two countries.
On an individual level, forex trading can also? be felt. ? For instance you will need to exchange your local currency for that of another country if you are to go abroad, or if you are to purchase its goods and services. This is determined by the current rate of exchange. The prices of the goods and services of foreign commodities are determined by he forex rate, so for those who are fond of purchasing imported products, they will feel the effect of the forex market as well.You can take a look at?True ECN?for more high quality information about forex.
It is possible that the forex market can be good for the economy of a country and bad for others. The thing is that there is always an element of risk as the state of forex rates can be so unstable you will notice changes as fast as 4 weeks later.
Source: http://freefinancearticles.info/understanding-forex-trading
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