FOREIGN EXCHANGE MARKET

Foreign exchange is the most volatile of all financial entities traded in the market. Forex market is driven by high liquidity and volatility. The entire forex trading and investment business functions as one large international market.

Forex Market Participation

Market participants and traders involved are speculators, financial institutions, central banks, corporate and governments, throughout world. Prominent and large chunk transactions are done for hedging and balance of payments purposes.  

Factors Affecting Forex

Forex rates are affected by various macro and micro economic conditions prevalent at the real time. Some of the major elements of concern are:

·        Demand and supply of a particular currency against other currency.

·        Economic and financial factors of the country, like balance of payment, GDP, inflation, current account surplus or deficit.

·        Internal and external political conditions.

Dollar Index

Dollar Index is a pertinent pulse of World Economy. Most of the exports and imports are in terms of USD. Even today, it is considered as world currency.

Dollar index shows the health of dollar against six major currencies of the world. Those currencies are Euro Zone currency (EUR) 58.6%, Japanese Yen (JPY) 12.6%, Pound Sterling (GBP) 11.9%, Canadian Dollar (CAD) 9.1%, Swedish Krona (SEK) 4.2% and Swiss Franc (CHF) 3.6%.