Currency Exchange Rates Define Market Behavior in Forex

Currency exchange rates are the rates at which two different currencies of the two different nations are exchanged. It is also known as foreign exchange rate which are solely depending upon currency rates. One may have to enter into foreign exchange market for various reasons. Those reasons may include investment in foreign currency, trading, permanent or temporary immigration, a vacation in foreign land etc. In all the situations, one needs to deal with currency exchange rates and therefore currency rates of two different countries. The reason d’etre of Forex being complex is precisely these currency rates or rather volatility of them. Forex is considered to be highly dangerous and slippery market because it goes through constant fluctuation and changes every minute and therefore, judgment to buy or sell is very difficult to take even for a seasoned investor, leave alone a beginner. Hence, it is advised that a beginner must learn the intricacies of this market at least for six months before taking a plunge in the market.

Currency rates define foreign exchange rates or currency exchange rates and currency rates are defined by respective nation’s socio-political and geo-political decisions. The basic rule that applies to the changing currency exchange rates is the rule of supply and demand. The more the demand, the stronger the currency, the lesser the demand, the weaker the currency. In a way, it is as simple as that. But, since it is simple, it is difficult to understand. When a novice enters the foreign exchange market, she needs to keep in mind this basic rule of the supply and demand. When a currency is in greater demand, it also means that it has strong political and economic hold on other currencies as well. Hence, if foreign exchange market is about quick and huge money, it also reflects social, economic and political undercurrents  of the world. And, in order to master this market, one has to learn and understand these undercurrents as well.