Hi there!
I’m a complete outsider when it comes to trading. An exchange rate seems to me as something artificial. Who or what decides the exchange rate?
Can someone lead me into understanding how and why a currency becomes strong?
Thanks
Hi there!
I’m a complete outsider when it comes to trading. An exchange rate seems to me as something artificial. Who or what decides the exchange rate?
Can someone lead me into understanding how and why a currency becomes strong?
Thanks
The Central Bankers print the money and set the initial “price”.
Everyone else in the market fights over the “price”. Good luck.
The entire currency system is artificial by its very nature.
I don’t concern myself with who or what decides the exchange rate; rather, I decide when and how much to exchange.
This ‘artificial nature’ only becomes a factor if the entire system collapses.
You could fill many pages in answering that question. Suffice it to say the strength of a currency is the percieved (real or otherwise) status of a countries economy. Our job is to trade the fluctuations in that perception.
The market determines the exchange rate in exactly the same way that the market determines the price of a stock, or a bond, or gold, or oil, or anything else.