Understood that the primer-driven foreign exchange transactions
Good traders know that their basic rights
"It's like a doctor asked him if he or charts of patients with the diagnosis and treatment monitoring of the conditions it likes. You need two."
- Bruce Kovner, the world's largest and most experienced one of the currency speculators.
Explain the four basic economic indicators
First growth
An indicator"The country's GDP growth. A growth in gross domestic product, due to strong economic growth will contribute to the amount of major currencies, the currency strength of the desire of investors. You should note that there is a high-inflation increase in also led to gross domestic product, which will lead to currency depreciation.
2. Interest
Healthy economic growth is the increase in speculative activities. Government began to raise interest rates toTo curb excessive speculation.
Interest rates will increase the currency traders rushed's leading currency, the value of the bid. This is because they always strive to achieve their own money for the high rate of return.
The only exception is if the Fed to improve as a political response to rapid growth in interest rates, but as a means to curb inflation. This led to a weak currency.
A high level of interest in one currencyDoes not guarantee understanding, if it is because of the high inflation, rather than the strong economic growth.
3. Trade
The balance of trade in goods and services flow between the two countries. A trade surplus of more than imports than exports. A trade deficit means more exports than imports'. The trade balance of goods and services only.
A trade surplus means that the currency will appreciate, in other countriesBid to acquire its goods and services. Trade deficit, currency devaluation, because they sell in other parts of the world currencies, commodities and services purchased.
4. Political stability
The foreign exchange market does not like it, because of political instability caused great uncertainty on future economic growth. With the strong economic growth of countries often see their currencies decline, if there is a more important, political unrest and other political flavorScandal or corruption within the Government.
3 theory, in the long run the impact of foreign exchange market
In our discussion of the theory, I would like to emphasize is that these theories will affect the foreign exchange market to a certain extent, but these theories have their limitations. Theory is the so-called theory because some of the key assumptions may not be the true situation.
The foreign exchange market only in those theories is not recommended. AndThese strategies are based on the impact of long-term direction of the currency. The impact of these factors, the direction of the currency during the period of 5 to 20 years.
Is important that investors understand the underlying drivers in the long run, even though it may not have the necessary currency in order to reflect today's conditions.
What is the balance of payments theory
The balance of payments include: two current and capital accountsAccounts;
The current account measures trade in material and finished products. Surplus or deficit between exports and imports as the trade balance. A trade surplus of more than imports than exports. Trade deficit, exports not only to import more.
Capital account measures the flow of funds, such as stocks or bonds.
Note: The description of the transfer of assets, but considers that this model, with operating funds and outflows帐户.
Balance of payments theory
Imports more than exports, have more money than the inflow of runoff, they say, there is trade deficit. Although different countries, more than imports, exports more money than the flow of run-off experience, they say, there is trade surplus.
Theory suggests that the balance of payments, the trade deficit countries to devalue their currencies, as the country's currency to sell more of market experienceImported from abroad. Selling pressure caused by the devaluation of national currency against other currencies.
Similarly, the country's trade surplus with ASEAN countries with appreciating currencies will appear. This is because more goods are sold abroad, with foreign currency to buy goods to buy. The sale of other foreign pressure to appreciate the national currency.
In general expected, the country's experience, positive or negative贸易. Is important that countries should strike a balance, so that the trade deficit can not continue for a long time to achieve, so it is not conducive to the country's economy. This policy should be implemented to return to surplus in trade deficit to come back the next calendar year.
Limit
International balance of payments model focuses on trade in goods and a breach of international capital flows. This is established in 1990, is to play an important role in capital flowsAffecting the country's exchange rate.
Thus, a country can have trade deficit, but because he was so large capital flows, such as more money in the total flow. The model is not considered capital, more money, since this year, obviously.
Monetary Model
This model is, the exchange rate is the monetary policy decisions by the state.
Restrictive monetary policy means that the central bank will sell its assets to the nationInvestments and loans in the open market to the public. Therefore, these actions will help to reduce the money supply, currency appreciation into a country.
While monetary policy, central bank cut, it will mean that the central bank's stocks and bonds back to the public on the open market to buy. As a result, which will enhance the country's money supply, leading to currency depreciation.
There are several factors that affect the rate:
1. The state's moneySupply
2. Expect that the future level of the country's money supply
3. Money growth rate of a nation
Limit
This model is more effective in preventing currency appreciation to vigorously promote a country's currency devaluation. Few economists only in this model, because they do not take into account the trade and capital flows.
Theory of the real interest rate differential
Interest Rate TheoryCountries have high interest rates, to see their currencies appreciate, while the low interest rates, countries should see their currencies would fall.
Basic Mode
If a country will raise interest rates, you will find the money income in these countries more attractive, the international investors turned their money. This process means that investors who buy the currency levelUse their own money, where high yields. Therefore, the country's currency will appreciate.
If lower interest rates, a better international investors to put their money so that they can get better returns. This will lead investors to sell the currency, so that they can move it overseas. Because of this strong pressure to sell the national currency of the results will lead to lose its value.
This phenomenon is another long-term investorsAlways looking for a higher rate of return to their money invested in is called carry trades.
Limit
The main disadvantage of this model is that it not take into account a country's current account, which is held on capital flows. Such as political stability, inflation and economic growth factors, not considered. Therefore, this model can not be all the time.
Free will in this on your web site or the use of electronic journal articlesAs long as the author of the following information / websites included.
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