THAT IS CURRENCY TRADING
THAT IS CURRENCY TRADING
As in most of the markets of financial, no specific physical location, so the currency market will exist as long as buyers and sellers agree to make a transaction at a specified price. However, the price has here the same meaning as in other markets, as this is a terms of trade, denominating exchange, ultimately, the number of units of one currency in terms of another or other currencies , determined by the intersection of supply and demand of foreign exchange.
The demand for foreign exchange is determined by imports (pesetas for foreign currency to pay for imports) and outflows (lending abroad, etc.), which depend on the following factors:
- Level of domestic or national income.
- Relative product prices.
- Level of domestic investment.
- Differential interests.
- Balance of the balance of payments.
The supply of Currency traiding is determined by exports and capital inflows, which depend on the following factors:
- Global Income or international economic activity.
- Relative prices.
- Differential interests.
- Quality and competitiveness of domestic production.
This is how the exchange rate is determined in a perfectly free market, but the reality is not like this, it has to go to different explanatory theories of their formation.
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