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| *Travel Tips>>>General - Asia Pacific Travel Tips |
What factors determine the exchange rate of a country's currency? |
Travel Info What factors influence or determine a currency's exchange rate?tell me. Travel Tips i have to check with my economic adviser Source(s): me Other Travel Tips If country A is buying a lot of stuff from country B, then country B is going to end up with a lot more liquid currency than country A is. Without money travelling the reverse direction, this increases the perception that one currency is more powerful than the other. Ultimately, like all other investment, its an issue of perception. In short, the demand for the country's currency. 95% of what drives the foreign currency exchange market is speculation. Traders exchange currencies looking to make a profit, many factors determine the decisions traders make. Interest rates, gold prices, oil prices, economic indicators and market trends are among the many tools traders use to determine whether they think certain currencies will rise or fall. About 1.9 trillion dollars a day is traded on the Forex market, the largest financial market in the world. Traders buy or sell depending on what they think will happen to a particular currency, not necessarily how that currency is currently performing, and that's basically what drives the market. INFLATION /CENTRAL BANK |
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