How is pricing determined for certain currencies?
The full range of economic and political conditions impact currency pricing. It is generally held that interest rates, inflation rates and political stability are top among important factors. At times, governments participate in the forex market in order to influence the traded value of their currencies. These and other market factors such as very large orders can cause extreme relative volatility in currency prices. The sheer size of the forex market prevents any single factor from dominating the market for any length of time.
The complete scope of economic and political conditions impact currency pricing. It is generally held that interest rates, inflation rates and political stability are top among important factors. Every now and then, governments participate in the Forex market in order to influence the traded value of their currencies. These and other market issues such as very large orders can affect disproportionate comparative volatility in currency prices. The sheer size of the Forex market puts a stop to any single factor from dominating the market for any length of time.
