Foreign Exchange

Factors Affecting The market

Sunday, October 29, 2006 8:19 AM mistrack

Currency prices are affected by a variety of economic and political conditions most importantly interest rates, inflation and political stability. moreover, government sometimes participate in the forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. this is known as central bank intervention. any of these factors, as well as large market orders, can cause high volatility in currency prices. however, the sizes and volume of the forex market makes it impossible for any one entity to "drive" the market for any length of time.

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