International currency exchange market is notoriously volatile market. Every minor change in the economical and political stability can affect the currency value and in turn foreign currency exchange. The most recent example is the Japan earthquake which took place in march,2011 shook the global FX and stock market.
You must be thinking that you are not a trader in fx nor in stock market so you have nothing to do with the nation's economy and politics. Have you ever gone for holidays abroad? Have you ever send money to your son or daughter studying abroad? Bought any property or asset in foreign country? Anything in which you have to sell your home currency to get the foreign currency is known as foreign currency exchange or international currency exchange.
As forex offers the cheapest rate most of the savvy people use FX to send money abroad. Thus, if japan's earthquake has made the yen weaken against USD and you have to perform trading of Yen/USD then you can see the loss you are making. The international commodities and shares may fallen down. There are other economical factors which affects on your international transaction.
Even if you are not involved in any international transaction, you can get impacted by the consequences of global fx. For example, if your nation's currency is getting weak in the global market, the government has to increase the inflation rates. The GDP of your nation will slowly fallen down. The people involved in the export and import business will suffer from big losses. To control the situation, the government may take certain steps and increases the price of domestic goods and services!
Furthermore, political factors of each nation is related with its currency rate in the global market. Global investors study the political stability of the nation they are investing in. The good stability attract more investors which in turn increases that nation's GDP rate. This is how exchange rate, political parameters and the nation's economy are interlinked.
You must be thinking that you are not a trader in fx nor in stock market so you have nothing to do with the nation's economy and politics. Have you ever gone for holidays abroad? Have you ever send money to your son or daughter studying abroad? Bought any property or asset in foreign country? Anything in which you have to sell your home currency to get the foreign currency is known as foreign currency exchange or international currency exchange.
As forex offers the cheapest rate most of the savvy people use FX to send money abroad. Thus, if japan's earthquake has made the yen weaken against USD and you have to perform trading of Yen/USD then you can see the loss you are making. The international commodities and shares may fallen down. There are other economical factors which affects on your international transaction.
Even if you are not involved in any international transaction, you can get impacted by the consequences of global fx. For example, if your nation's currency is getting weak in the global market, the government has to increase the inflation rates. The GDP of your nation will slowly fallen down. The people involved in the export and import business will suffer from big losses. To control the situation, the government may take certain steps and increases the price of domestic goods and services!
Furthermore, political factors of each nation is related with its currency rate in the global market. Global investors study the political stability of the nation they are investing in. The good stability attract more investors which in turn increases that nation's GDP rate. This is how exchange rate, political parameters and the nation's economy are interlinked.
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ReplyDeleteThe people involved in the export and import business will suffer from big losses. To control the situation, the government may take certain steps and increases the price of domestic goods and services!