Foreign exchange rates or forex rates actually indicate the value of one currency versus another. For example, the forex rate of two Australian Dollar (AUD) to Euro(EUR) shows that 2 Australian Dollars are equivalent to one Euro. Forex rates are determined by several factors such as psychological, political, fundamental and technical factors.
Factors Influencing Forex Rates
The factors that can directly affect forex exchange rates are as follows:
1. Technical Factors: Interest rates, relative inflation rates, exchange rates and capital movement and official intervention are some of the technical factors that can instantly increase or decrease forex exchange rates. Higher capital yielding forex exchange currencies generally have high forex rates as compared to the lower ones. Comparatively high inflation rate directly effect economic policies of the country and it also undermines the expected demands of the country’s currency in forex exchange market. In forex trade, the official intervention and forex market regulations can also affect forex exchange rates. Although, the official intervention can only yield positive results for forex currency traders if it’s done properly and whole heartedly.
2. A political crisis in a country or a big event like 9/11 can prompt forex exchange traders to buy Euro instead of USD.
Other determining factors include forex currency speculations, attitude of banks towards keeping trading positions open through out the day.
How Traders can get Best Forex Exchange Rates?
Here are few ideas for you to make sure that you are getting the best forex exchange rates in forex online trading:
• Information- Try to learn about forex currency market as much as you can before trading currencies in live market. With the help of forex currency broker, you can not only easily trade with your live forex account but you can grow your capital as well by getting real time forex exchange rates.