AUCKLAND, NEW ZEALAND / ACCESSWIRE / December 18, 2017 / As a primary aspect affecting the financial health of a country, exchange rates are one of the most studied economic measures in the world, especially in regards to the appreciation and depreciation of a particular currency. Determining and analyzing the various factors behind the fluctuation of exchange rates is a key objective when ensuring wise investments while trading on the foreign market. Sentinel 1973 highlights the key drivers of change to the value of a nation's money, which is largely a combination of activity both within that country, and its closest trading partners.
Although a currency's worth is dependent on a number of issues, inflation is often the most consequential. The level at which prices for goods and services rises has a significant effect that generally serves as a trigger to other factors. For instance, if inflation were to decrease in the United States, the purchasing power of the dollar would increase in relation to other currencies. US exports then become more competitive, and the demand to purchase the dollar for US goods goes up. Countries with lower inflation rates tend to see an appreciation in the value of their money, with the opposite occurring in a reverse scenario.
Interest rates are another key element to the worth of a government's money. Depositing capital into a country's banking system becomes more attractive if their interest rates ascend in relation to others. By saving in these banks, a better degree of return will then cause the demand for that currency to climb. Central banks also have the ability to influence inflation and exchange amounts simply by manipulating interest rates. However, Sentinel 1973 points out that if the figure is much higher in other countries, very little impact is made to the appreciation of that currency.
Current events can play a large role as well, particularly in terms of depreciation. Speculation in regards to political events or changes in commodity prices can easily cause a currency to drop in value, even if slightly at first. An example of this would be someone anticipating the Euro to fall, then selling now for a currency whose value they believe will rise as a reaction. This shows how sentiments within financial markets can drastically influence foreign exchange rates across the globe. If these markets are alerted to the likelihood of an interest rate boost in the Eurozone, there is a strong chance the valuation of the Euro will go up as a result.
Founded over three decades ago in Auckland, New Zealand, Sentinel 1973 is the leading broker market of Contracts for Differences (CFDs,) and a specialized trader of financial products in organized and Over The Counter (OTC) stock markets. As one of the first to open up the foreign exchange (Forex) to private investors, the company currently offers 10 platforms to trade more than 200 financial instruments. With a global team of professional financial experts, the firm identifies superior trading opportunities, while protecting their clients' investments throughout 180 countries in Europe, Asia, Middle East, Africa and Latin America.
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