The forex market — Foreign Exchange Rates

One concept that has always been an essential aspect in this is of a country is the fact that it has its currency. The concept of national mintage has been around existence ever since the world was divided into countries with national edges.

The united states has always used the dollar, the uk uses the pound, Germany had the Deutsche Mark, The japanese uses the Yen, etc. Recently many The european countries have used a single currency, the Euro which has obviously had a direct effect on the forex market even as know it today.

Even though national mintage has been online for a long time, trading between different countries, i. e. the requirement of a foreign exchange rate, is a more recent phenomenon and has only really made a breakthrough over the course of the last century. It has rapidly grown into the huge market it is today, generally considered the most liquid market in the world.

Stock markets form the core of the international monetary market. The foreign exchange rate is the value of one currency expressed in another, for example $1 = 0. 76EUR. The exchange rate can therefore make sure as the price of a currency. Much like any other market price, it relies on supply and demand. As supply and demand are constantly changing, exchange rates can go up and down. These movement are referred to as volatility. อัตราแลกเปลี่ยน

Accounting allowance occurs when there is an increase in the supply or a drop in the demand of the currency in question. The other, an increase of the value of one currency compared to another is called appreciation. Appreciation occurs when there is a drop in the offer or an increase in the demand for the currency in question.

What factors determine supply and demand?

International trade

An important factor is international trade and services. Imported goods and services are usually paid for in the currency of the conveying country. For example: An English distributor of American pharmaceutical drugs who wants to buy drug products in the united states will have to change British Pounds into American dollars based on the daily exchange rate.

Sometimes international trade transactions are paid in a currency that is accepted worldwide but is not the currency of either of the countries active in the transaction. This is called a key currency. The most important key stock markets are the American dollar, the British pound and the Euro.

Foreign investment

Services and products are traded and traded in all over the world. Money in the form of investments does exactly the same thing. A distinction should be made here between foreign direct investments and collection investments, meaning the investment in shares. In the case of foreign direct investments the foreign investor is directly active in the economy of the host country. Collection investments are purely financial transactions without the investor being able to have to put out any type of direct influence on the economy of the host country.

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