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ntrader

Forex Prices in the Long Term

By ntrader, in Forex

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ntrader    10

ntrader
Posted
What are the factors that drive Forex prices in the long term?

 

Interest rates are an important factor influencing currency exchange rates. When a country’s key interest rate rises higher or falls lower than that of another country, the currency of the nation with lower interest rate will be sold and the other currency will be bought so as to achieve higher returns. Given this increase in demand for the currency with higher interest rate, the value of that currency will rise against other currencies.

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ntrader    10

ntrader
Posted

Exchange rates are an expression of one unit of a currency in terms of another. One important factor that affects the forex prices is the rate of inflation. Inflation occurs when the rate of money growth in an economy is higher than the rate of growth in real GDP. In an inflation environment more money is buying less goods which in turn drive up the prices of these goods, so inflation essentially changes the relative value of this currency relation between two economies.

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