Forex – How It Works?

February 20th, 2011

In the world of the forex market there are many variables that can affect the performance of the currency. It is known that this market is based on the buying and selling of currencies and there is a fundamental value for this purpose, which they take from time to time.

Currencies are bought and sold in pairs and acquires the fundatmental value of the exchange rate. The exchange rate is an index that expresses the value of one currency into another currency terms. The euro is worth a certain amount of dollars. But the rate of exchange is not only the mathematical expression of a value, the exchange rate is the mathematical result of various political events, economic, social and historical. The value of a particular currency is very much influenced by what happens in his country. Political crises, economic or otherwise affect the value of currencies and their exchange. In the week just past there have been several events that have affected the “condition” of the different coins.

For example, the ECB, the EU and the IMF decided in fact to bestow new aid to the country that does not allow Hellenic and declared bankrupt. An event of this magnitude would undoubtedly epilogue and its influence on the Euro monetary system and its current value. The positive change has meant that the Euro is strengthening against the dollar. Other example of a positive input can be taken that of Spain, which is selling its bonds like hot cakes. US Dollar is going through a period of suffering from the economic crisis as a result of turn generated by the huge public debt. The United States of America are experiencing a “black”, which has lead to unemployment and the increase in debt and hence, the dollar to suffer for it. These situations have much influence on the values of coins and their performance in the financial markets.

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