And who determines currency values?
The answer to the second part of the plain. value of the currency is determined by the currency buyers. This is primarily travelers, governments and Forex traders. FOREX stands for Foreign Exchange. In determining the fair market value of the currency there are many factors that traders of currencies, government and business are taking into account.
Fair market price – a price at which a willing buyer and a willing seller on the & # 39; unite. The buyer must take into account many elements and opinions, to try to accurately assess the value of the currency at any time. Now the world there are about 180 different currencies. Let's look at some of the factors that are used to determine the value of the currency.
Factors affecting the value of the currency:
1. The political conditions in the country – this includes the stability of power, the amount of corruption, bribery and the degree of enforcement. Also includes the country's relations with other countries and especially their relationship to US, UK, China and Russia. Form of government in the country as a & # 39 is a factor, which is used to assess the value of the currency. Consider the different forms of government in Saudi Arabia, China, the UK, Venezuela and Thailand, only some of them.
2. The economic situation – these include factors such as employment, unemployment, work ethic, infrastructure, inflation and direction of the economy. Old or new orientation; computers and high-tech, or more farming and manufacturing.
3. Perception of the outside – the perception and attitude of other countries in the same country as important as the reality of the situation in the country. News, media, movies, newspapers, rumors and spin can create views. How much is known about the country? The less you know, as a rule, the smaller the value of the currency.
4. Demographics – the young population may mean better prospects for the future, people are more open to change and development, and increasing the number of workforce. The total population of the country – it is a factor. How much weight does this country on the world stage.
5. National leaders – Factor with & # 39 are open, reliable and likeness of the visible leaders. This includes political leaders, sports figures, business owners and celebrities. Here are some national figures who affect their countries, or the best, or the worst. Kim Jong Il, David Beckham, Nicole Kidman, Madonna, Osama bin Laden, Barack Obama and Vladimir Putin. They help shape the perception of the country in the world.
6. Isolation versus openness – Continuum China is becoming more open and transparent. It helps. Cuba is very closed and isolated. Venezuela becomes increasingly isolated some of his recent actions. China's markets are becoming more open. Cuba, Kyrgyzstan, Russia and Japan have different levels of openness to the outside world, which affects the value of their currency.
7. Natural resources – type and a & # 39; the volume of the exploitation of natural resources of the country, certainly helps create a perception of value or absence of such currency in the country. Extraction of minerals, forests, oil, fish and other resources considered. Also, the level of technology for the development of these resources.
8. Factors out & # 39; I, such as drought, tsunamis, earthquakes and floods, are taken into account. How often they occur and how to respond to their country. They also affect desirability, safety and perception of the country. This tourist destination?
9. The war and conflict – with any other country fights country and who is an ally? Their military strength and technology, a willingness to go to war and what important factors in assessing the strength, stability and the value of its currency.
10. Education – includes languages spoken, level of computer & # 39; computer know-how, an Internet connection, culture and religion. Scientists, entrepreneurs, authors and inventors influence the type and quality of education in the country.
In conclusion, currency values are determined by many factors. Not only one question, but many of the songs. In currency trading, such as the FOREX, trades are usually carried out in pairs. The values have to be about something. So, how to behave in relation to another country. Conventional forex pairs such as the US dollar and the Japanese yen, the euro and the US dollar. These and other factors determine the value of the currency. Some tangible, some intangible. Some of them are fixed, and some – to manage. Sometimes it is the moment of the news, and sometimes long-term situation. That is why currency values change frequently, and there is no one, no person who determines currency values. And why currency exchange, based on dust Currency values can be exciting, lucrative, changing, fun or disastrous form of business or investment.