Forex Foreign Exchange Rates

In foreign exchange market, the value of two currencies and how they relate to one another is known as the forex exchange rate. The foreign exchange rate between two currencies specifies how much one currency is worth in terms of the other.

The foreign exchange is one of the largest financial markets in the world. By some estimates, about 3 trillion USD worth of currency changes hands every day and the figure is rising everyday.

Forex trading involves transaction between large banks, speculators, corporations, governments, and other financial markets and institutions. Individuals constitute a small fraction and participate indirectly through brokers or banks.

FOREX Traders Fundamental Analysis

Fundamental analysis is like a road map for their entry and exit points into the FOREX market. If they have a broad overview of the market conditions they will entry the market in an appropriate moment. The laws of supply and demand have an effect on all prices, including currency. And they are influenced by the economic situation around them. The most important elements is how stable the economy is or what is its interest rate. Normally the interest rate, is the most important single indicator about what direction the FOREX will take. Higher interest means more people buying a currency.

The situation in a market is possible, analyzing carefully the indicators released in a country. Two very important are the international trade and, as said above, the interest rates. In international trade, a deficit balance is an unpositive indicator. This simply means that there are less exports than imports. It means that there is a higher flow of currency going out the country than coming into the country. This has a negative effect on the price of the currency. Of course, there are exceptions. This is only a pressure to the price of currency, not a natural law. Many countries operate on deficit balances with a stable currency. Some countries have more resources than other to keep its currency stable.