Submitted by: Sanjay Singha
As the different economy has open there doors for the investment from Foriegn Investment Institution and Foriegn Direct Investment. That means each economy wants to sustain in global market in concern of there performance and growth for which there are some perameters, these are dollar reserve ratio, import and export, monotory policy, interest rate, inflation rate all these factor affect the growth of that economy and the value of currency as compare to the other currencies.
As we know that, for any kind of international trade or transaction mode of payment is an international currency i.e, US dollar. Due to the globalization and liberalization currency exchange play a vital role to exchange one currency into another in global market.
Currency Trading : Currency trading facilitate foreign trade by exchanging one currency into another. Like a equity or commodity trading held on a organized exchange. Forex is also an Exchange or market place where an individual can trade in different currencies or can exchange them.
Forex (foreign exchange market) is a global decentralized market for the trading in different currencies which open for 24 hours. In forex different currency pairs are available for trading.
In a pair first currency is a base currency and second currency is counter currency. When an individual buy or sell this currency pair, that individual performing that action on base currency. In forex there are around 39 currency pairs are available. Like EUR/USD, USD/JPY, GBP/USD here in the above pairs EUR/USD base currency is EURO and the counter currency USD, that represent the value of US dollar in Comparison of 1 Euro.
Know we have understanding that there are so many factors that we have discuss above that impact the over all performance and growth and individual economy globally apart from that the other factor like some data’s about industrial production, consumer price index, wholesale price index and other that affect the valuation of the currecny as compare to other. In international market some index are also available like US Dollar Index that shows the performance of US Dollar in comparison of other currency.Like may you have heard about the data’s ralated to US Economy like ‘Unemployment Claim’ or ‘jobless claim’ that US government provide to US jobless people. If Jobless claim is positive or negative then it would impact on US dollar. May be the value of dollars can apreaciate or depreaciate in comparison of other currency.
As the performance or growth of a economy affect its valuation of currency also. In international market every economy linked with each other in concern of international trade and import and export. Import and export also play a vital role on currency appreaciation and depreciation. In international market US Dollar is a international currency, for the import of any kind of commodities mode of payment is in US dollar. Thus it is important for each economy to maintain a strong dollar reserve.
For any indiviadual economy if import is less and export is high means economy is on growth because that generate a foreign income through which dollar reserve can increase. While is import is high and export is less that means value of currency of that individual economy will be less as compaired to the other currency.
Like a Forex Trading Tips or in cash, commodity, future and option tips a individual can also receive a recommendation in currency market. According to his individual risk appetite because, in currency derivative a individual can trade with the minimum investment as compare to the equity, commodity and its derivative.
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