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The fundamental reason for determining the direction of foreign exchange rates


  The fluctuation of foreign forex d forexrebatesbrokerscount brokers cashback forexs, although a lot of changes, forexbonusrebate other commodities like ultimately is determined by supply and demand in the international foreign exchange market, when the buyers of a forexdiscountbrokers more than the sellers, the buyer scrambled to buy, the buyers power is greater than the sellers power; sellers of strange goods, the price is bound to rise Conversely, when the sellers see poor sales, competing Selling a currency, the market seller power prevails, the exchange rate is bound to fall but affect the balance of supply and demand of many factors, but in summary, there are mainly the following: 1. A countrys economic growth rate which is the most basic factors affecting the exchange rate fluctuations according to the Keynesian school of macroeconomic theory, the growth of gross national product will cause the growth of national income and expenditure income increase will lead to imports of products The expansion of demand, which in turn expands the demand for foreign exchange, promoting the depreciation of the local currency and the growth of expenditure means an increase in social investment and consumption, which is conducive to promoting the development of production, improving the international competitiveness of products and stimulating exports to increase the supply of foreign exchange so in the long run, economic growth will cause the appreciation of the local currency Thus, it seems that the impact of economic growth on the exchange rate is complex but if we consider the role of currency preservation, the exchange Psychology has another explanation that the value of the currency depends on the subjective evaluation of the currency made by the supply and demand sides of foreign exchange, this subjective evaluation of the contrast is the exchange rate and a countrys economic development trend is good, the subjective evaluation is relatively high, the countrys currency is strong 2. The balance of payments, in simple terms, is the import and export of goods and services, as well as the import and export of capital. If exports are greater than imports, capital inflows mean that the demand for the countrys currency in the international market increases, and the local currency rises. If the price level of a country is high and the inflation rate is high, it means that the purchasing power of the currency decreases, which will lead to the depreciation of the currency and vice versa. The role of interest rates in exchange rate fluctuations has been discussed by all monetary schools of thought, but the most clearly articulated is the interest rate evaluation theory that emerged after the 1970s, which explains exchange rate movements from a short- to medium-term perspective. 5. peoples psychological expectations This factor is particularly prominent in the current international financial market exchange psychology that the foreign exchange rate is the subjective psychological evaluation of the currency of the supply and demand sides of foreign exchange concentration of the evaluation of high, strong confidence, the currency appreciation This theory in explaining the numerous short term or very short term exchange rate fluctuations In addition, the factors affecting exchange rate fluctuations include government monetary and exchange rate policies, the impact of unexpected events, the impact of international speculation, the release of economic data and even the impact of the opening and closing of the market
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