Do you know what factors that influence Forex market? Five days a week, traders from all around the world make transactions in the Forex market, making it the biggest financial market nowadays. Considering how big the Forex market is, a lot of factors are involved in affecting how it operates.
For this reason, knowing what factors that could affect the price movement in the Forex market is necessarily important. You may have heard that social and political changes can influence the Forex market and its valuation. However, you should know something more specific than these.
Before exploring some external factors that can affect the Forex market, it would be better to know what currency exchange rates are first. This is because currency exchange rates are the thing that you will trade in the Forex market.
When it comes to external factors that influence Forex market, a country’s economic health has always been known as the main reason why exchange rates can move. It becomes a crucial point to identify if a currency offers the best value for money or not.
External Factors That Make Changes in the Forex Market
Now, what are the things that affect the Forex market externally? Inflation rates are indeed the most commonly-known factor that causes changes in the currency market. A country with a higher inflation rate than another’s won’t show an appreciation in its currency value. Other factors are explained below.
• Current Account/Balance of Payments
The balance of trade and earnings on overseas investment can be reflected by a country’s present account. Imports, exports, debts, and other transactions are involved here. Depreciation may arise when a country spends more of its currency than its earnings on exporting goods/services.
• Interest Rates and Government Debt
Another one of the factors that influence Forex market is interest rates. An interest rate swift is capable to manipulate a country’s exchange rate toward dollars and currency value Besides, government debt is also correlated with the exchange rate since it has something to do with foreign capital and inflation.
• Political Stability and Performance
A country’s currency strength could be influenced by its political circumstances and economic performance. Foreign investors tend to find a country with less threat for political chaos appealing, leading to increased appreciation value of its domestic currency. The currency value of such countries doesn’t have a room for uncertainty.
In addition to the external factors mentioned above, terms of trade can also be an influential issue in the Forex market. Terms of trade can show whether a country acquires high revenue or not. It can be used to see if a country’s currency value is increasing.
Other Factors to Know When Trading Forex
Being aware of the factors that influence Forex market is not only the way to become successful in this business. You also need other knowledge and skills to make the most of your Forex trading businesses. Thus, continuous learning through various methods is necessary when trading Forex.
One of the best ways to gain more skills and knowledge on the market is by learning Forex through Didimax’s Forex broker. As
the best Forex broker in Indonesia, Didimax not only offers an advanced trading platform for traders but also a place to learn the Forex market further.
Didimax provides several great mentors to help you increase skills and knowledge through seminars, webinars, and private training. You can even find a great number of Forex articles on Didimax’s official website, making it easier to learn the market anytime and anywhere.
In conclusion, knowing some factors that can change the market is crucial for a Forex trader. It would be helpful to analyze the market and determine how to proceed with your trades in particular conditions. That’s all several factors that influence Forex market.