The currency exchange rates are determined by the market. The currency is free-floating and as a result its rate is not fixed as was done before. The rates in the market are determined by the extent of demand and supply of the currency in the market. As a result, its rates constantly changed and fluctuated. Earlier the currency rate was based on the fixed exchange rate when a currency was fixed with reference to another by the government who could change or devalue this rate as and when needed. Between World War II and 1966 the Western European countries fixed the exchange rates to the dollar. The market based exchange was adopted later.
The exchange rate of a currency with respect to another changes when the value of one currency changes. The value of a currency increases when its demand increases more than the supply. The value declines when the demand for the currency declines with reference to the supply. There can be many reasons why the demand for a currency declines. The transaction demand of the currency arising from increased international trade could be one reason. Or the demand of the currency by speculators could increase. The extent of business activity of the country in the international market, the levels of employment and the gross domestic product (GDP) determines the transaction demand. The spending on goods and services increases with increase in employment.
Currency worth about $4 trillion dollars is traded every day. It is one of the largest markets in the world. There are a number of guides in the market to teach about foreign exchange market to persons who wish to invest in the market. Some of these are The Forex Training Video Course, Instant Forex Profit, The Magical Forex Trading, The Professional Forex Training, The Forex Assassin, The Forex Strategy Workbook and Auto Cash System.
The change in the demand for currency as a result of business activity is adjusted by the central banks by adjusting the available money supply. It is difficult for the central banks to adjust to the demand for money from speculation. They try to do this by adjusting the interest rates. With higher interest rates, there is an increase in the purchase of that currency. The demand for the currency increases. Currency speculation is considered to undermine the economy of a country as large currency speculators can unduly influence the exchange rates.
It is a must that you educate yourself first before engaging in any activity, especially in a foreign exchange business. To help you with this, the Forex training videos are effective tools that truly works for you and all other business minded persons.
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Topics: Currency Trading | Comments Off
Tags: Business, central banks, countries, currency, currency exchange, Currency Rates, Currency Trading, Finance, foreign exchange business, foreign exchange market, Forex training videos, Investing, Investments, money, training videos
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Matthews, Dana "Forex Training Videos: Effective Tools In Learning The Exchange Market." Forex Training Videos: Effective Tools In Learning The Exchange Market. 2 Jul. 2010. uberarticles.com. 19 Aug 2014 <http://uberarticles.com/finance/currency-trading/forex-training-videos-effective-tools-in-learning-the-exchange-market/>.
APA Style Citation:
Matthews, D (2010, July 2). Forex Training Videos: Effective Tools In Learning The Exchange Market. Retrieved August 19, 2014, from http://uberarticles.com/finance/currency-trading/forex-training-videos-effective-tools-in-learning-the-exchange-market/
Chicago Style Citation:
Matthews, Dana "Forex Training Videos: Effective Tools In Learning The Exchange Market" uberarticles.com. http://uberarticles.com/finance/currency-trading/forex-training-videos-effective-tools-in-learning-the-exchange-market/
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