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Forex Prices : What factors affect them ?

The forex market is just a fancy term for the foreign exchange market. In the forex market, there is an official trading of currencies that take place and this is where the buying and selling of shares happen at an international level. The foreign exchange market affects the economy of every single country and contributes to them majorly thus making it the largest market in the world.There are many factors that affect the forex trading in India and they affect it significantly.

The economic health of the country

It is highly essential that a country has a healthy economic condition to determine a good currency value. A country must generate a good GDP, employment results, and so on to help the currency stand in a strong place in the world.

Government policies

Fiscal and monetary policies play a role in affecting the currency as it concentrates on the spending of money for government purposes that can ultimately change the value of the currency itself.

Inflation:

If a country is undergoing rising levels of inflation, then the currency is bound to drop out in terms of its value. Forex tips will have to be followed while considering investing in the international market as inflation can have a huge impact.

Efficient trade systems:

Trading that occurs between two countries must happen in a clean an efficient way so as to promote forex prices. If surpluses or deficits occur, there can be a negative impact on the currency thus producing undesirable results.

Politics:

Politics is something that influences anything and everything in a country. So it is only natural that the country?s currency depends on it as well. The dirty game of politics can affect not just one but two countries at the same time. If there is a political upheaving in one country then apart from affecting just the respective country, it also has the ability to affect the neighbouring country as well. International, external, and internal political events can all have influences (both negative and positive) on the forex exchange.
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