Demand and Supply of Currency

1
Demand and Supply of Currency

• Presented By
• http//www.premiumessays.net/

2
Introduction

• Every nation has its own currency .
• Most of the traded currencies in the world
  include
• United States Dollar
• Euro, Japanese Yen
• Pound Sterling
• Swiss Franc
• Chinese Yuan
• Mexican Peso

3

• Forex trading entails the exchange of currency
  with another.
• Exchange rate in many countries or markets is
  determined by supply and demand of currencies.
• Exchange rates play a substantial role in a
  countrys relative level in the growth of
  economy.
• A higher currency impacts trade greatly. 
• There are a number of factors that affect the
  demand and supply of currency.

4
Inflation

• Lower inflation brings in a rising currency value
  .
• The purchasing power increases relatively to
  other currencies.
• Inflation depends on factor such as oil price
  changes and internal factors like politics
  climate .
• In case of high inflation levels, the currency is
  likely to weaken.

5
Interest rates

• A countrys interest rates can rise or fall
  higher than another country.
• The currency of the country with lower interest
  rate will be sold.
• The other currency will be purchase to achieve
  much higher returns.
• In case of high demand for currency with higher
  interest rate, the worth of the currency will
  rise against other currencies.
• Higher interest rates regardless of where you are
  making your transactions guarantee high capital
  flows.

6
Political instability

• A country with a positive growth in economy will
  attract more investors.
• A politically stable country impacts investors
  decisions.
• This may however may lose confidence in the
  respective countrys currency.

7
Market judgment

• Currency exchange rates are impacted by
  imperceptible factors .
• They include emotions, analysis, judgment and
  understanding of the political and economic
  events.
• It is wise to always determine the market
  reaction.
• This is before any information on currencies hits
  the market.

8
Government policies

• Many governments globally come with varying
  policies.
• These impact exchanges rates of currencies and
  trade in general.
• The central bank always takes part in buying and
  selling of currencies.
• This is in order to stabilize them at a realistic
  level.
• Investors and traders should always understand
  how currency value and exchange rates work.
• They should also figure out the essential role
  that they play in their investment and trade in
  general.

9
Get More Information About Demand and Supply of
Currency

• At
• http//www.premiumessays.net/