What are the reasons of fluctuation in price?

Answer 1

Factors include: * Monetary policies of the federal reserve or central bank. * Health of an economy. * Trade policies. * Currency inflation and deflation.

FACTORS CAN BE CATEGORISED INTO 3:

1 Economic factors

2 Political factors

3 Market psychology

Answer 2

1) Trade (exports/imports)

2) Interest Rates - increasing the interest rate causes 'hot' money to flow into the economy, therefore the demand the domestic currency increases, therefore the currency appreciates.

3) Inflation - relative inflation rates affects the economy's international competitiveness , so if the economy is experiencing higher inflation rate than its trading partners to such a situation that it is less competitive than they are, than there shall be less demand for the domestic currency as foreign markets will demand less goods and services from you, hence the demand for the domestic currency shall drop.

4) Speculation - simply a believe in the path the currency, shall cause speculators to adjust their trades in light of this believe. e.g. if currency speculators believe that an economy is overheating and soon there shall be a devaluation, then they will get out of the currency causing there to be bre more supply than demand on the forex for that currency, hence it depreciates.

Answer 3

The Factors that determine exchange rates is>>(in short)

1) Gold Reserves- Country that has enough gold is more strong)

2) Import/Export- If Country doing more Import,they pay in their currency and that currency get strong so more export more strong the countries currency.

3) Foreign Investments- Foreign investors investing in ur country>Selling their currency and buying ur currency>Investing>gaining profits.So ur currency appreciates.

4) Inflation- Lower Inflation Higher Currency Value

5) Public Debt- More Debt NO Foreign Investement because Ur Country has Already lots of debt and so lots of Defaulters.

6) Political Stability- Country with stable government will allow more foreign investors.(for stable rules,new government new rules,and so effecting foreign investors.

Answer 4

Many factors affect the value of a country's currency. Some of them are clear and direct, others are indirect and unknown. Among the main factors are:

1. Inflation rate

2. National debt

3. Central bank interest rate

4. Trade balance with other countries

5. National foreign currencies reserves

6. Economy Forecast

7. Speculant trading

8. Central bank currency manipulation

9. Supply and demand fluctuations