Factors

The exchange rate is an important determinant of a country's capability of trade. It determines the how economically promising a country is. The money equivalence or the value of currency that a country holds is critical for the global market. The key countries in the world currency market are closely watched and monitored. Small-scale foreign currency rates also matters, because it reflects the investor’s gains.

Country trade 

Understanding the country’s internal and external economic status will help a newbie investor in the market. The catch is that if the currency is high, the country's imports are expensive while imports are cheap in global scale markets. If the currency is low, it is the opposite.  The country's exports cheap while imports are expensive.

Factors affecting foreign currency rates

There are many factors, which determine the movement of exchange rates. The key is to remember that the currency is relative from country to country. Here are the factors that determine the foreign exchange:

Government debt

If the government has high debt, the economy hurts. When the taxes are high, the buying capability of the people lessens because of the additional toll on their monthly budget. It has a negative effect on the inflated value in the long term, which is called in the nonprofessional’s term, as debt drag.

Peace stability

When peace an order in the country is very volatile, brokers are doubtful to bring in stocks and invest. Most of them sell out their trade for the fear of future destabilization. Snap elections may call for protest. The pro economic leaders might lose their current positions. This is not a good picture of the market.

Employment rate

If there are low employment opportunities in a country, the circulation of money will slow down. The jobless citizens have nothing to spend. Those who have jobs will also spend less because they are conserving their income for the anticipation of future needs. Then, currency depreciation is likely to follow. These are the things, brokers completely avoid.

Foreign trade

You will know if the country has a good currency value if the export prices are greater than the imports. This means that their revenue is high. The movement of their foreign currency rates is rising.