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Reasons for fluctuations in foreign exchange rates

The exchange rate, which is the exchange rate of currencies between nations, continues to fluctuate as long as transactions are taking place. The exchange rate of a currency in the market is determined by the balance between supply and demand for that currency. When many people want one currency and the other currency is no longer needed, people buy the one they want to sell the currency they no longer need. At this time, the value of the currency you want will increase, so the exchange ratio will fluctuate. The value of currencies that are often sought after goes up, and the value of currencies that are not needed goes down. The value fluctuates depending on the power relationship between what you sell and what you buy, not only in the foreign exchange market, but also in the actual buying and selling of goods. In the case of currencies, the fundamental factor is one of the factors that has a great influence on the balance between supply and demand. This is the economic growth rate of a country, the growth of labor productivity, wholesale prices, etc., and shows the basic economic power of the country. Countries where the value of money rises have such high numbers and are expected to have better growth potential. On the other hand, if there is a temporary movement of a huge amount of foreign currency due to export settlement performed by a large automobile company or acquisition of an overseas company, the exchange rate will fluctuate temporarily. This is called the actual demand factor, and is the case where the market price is linked to the movement of foreign currency caused by the movement of the economy. Not only the economy, but also political factors such as major natural disasters and accidents, political changes and changes of leaders are factors that cause exchange rate fluctuations. Anything that is likely to have an impact on the economy can be a factor in currency fluctuations. War is the best of all. For example, the market has the phrase “emergency dollar buying.” As the word says, it shows that the dollar is needed and valued when a natural disaster, war between nations, or conflict occurs somewhere in the world.


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