How the Economic and Political Situations Affect Forex Rates

Forex rates are always affected by the issues happening around the globe especially around economy and politics. The slightest move in the stock market of the countries belonging to the most influential can affect the economy of the whole world. The most affected countries are those belonging to the third world for they could not do anything but go with the flow and impose bigger taxes for their countrymen to survive and thus in return creating a more deprived people. Forex rates are indeed very strong words that should not be taken for granted.

Forex rates or foreign exchange rates can move slightly or even suddenly everyday depending on the closing of the trades made on that particular country and trading can be affected by the economic and political situation in that country. That is why the stock market really never closes because the trading for the particular currency goes on with another country. It’s like even if the US Dollar stopped moving for that particular day but Japanese Yen is still trading, it could still affect one another at the closing trade of the one and upon the start of trade of the other for the next day.

Take the situation that happened in Egypt. Before the riot, the Egyptian monetary was still doing okay but when the riot began the margin between the US Dollar and Egyptian Pound widen. All changed in just a matter of minutes. Forex rates are indeed something to be afraid of especially when you live in a country belonging to third rate.

Forex rates are usually based on US Dollar being the agreed currency to be used for international negotiations although other currencies are also accepted but most countries prefers US Dollars because they are more familiar with the said currency. When the economy of America experienced some difficulties, most of the world’s economy went down with them since most of those of countries have US Dollar reserves and when the US Dollars went down, so did the economy of those countries. Forex rates are greatly affected that way, the US Dollars went down the whole world felt the impact and they were most especially felt by the thriving countries.

All the world are praying that the US economy would get back on it’s feet as soon as possible as recent reports revealed that even European market is experiencing some difficulties. Whether they were affected by the US economy or not, the result is still the same – even the considered stable regions can be affected by the Forex rates.

One should not be surprised anyway because all the countries around the globe rely on each other and constantly trade with each other for the needed materials, data, and the likes. It may be difficult now but there will come a time that everything will be back in its proper places. With all the things happening around the globe, whether its economy related or about politics, one should brace himself or herself for the next Forex rates.

4 comments

  1. Like any endeavor, it takes time and practice to become skilled at accurately predicting forex rates and the forex market trends. Understand the methods used by the successful forex traders, since they have proven methods that are working for them.

    • For any trader, it is important to know that the forex rates change from second to second, even further complicated by the delays and human error. This makes it extremely hard to track a pattern in the currency pair’s forex rates.

      • You need to understand how a forex rate works to get the full picture of how the whole forex market works. This is a critical piece of the whole forex puzzle so make sure you have a firm grasp of the concept of forex rates.

  2. In the foreign exchange market, considered the biggest market in the world, the exchange rates of the various foreign currencies traded within it comprise the backbone of the forex market. Legions of traders make their livelihood out of the various movements of foreign exchange rates in the market.

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