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WHAT CAUSES THE PRICE OF CURRENCIES TO FLUCTUATE

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WHAT CAUSES THE PRICE OF CURRENCIES TO FLUCTUATE




The value of a currency rises or falls in relation to the forces of demand and supply. When the demand for a currency exceeds the available supply, the value of the currency tends to rise. Conversely, when the supply of a currency exceeds the available demand, the value of the currency tends to fall. Let ’s look at four of the most important factors that cause prices of currencies to fluctuate: economic factors, political factors, natural disasters, and speculation.
Economic Factors


When traders look at economic factors, they are searching for one key word: growth. When growth is non-existent or negative, the value of the country ’s currency tends to fall. This is because the currency is not viewed as attractive or valuable, and traders start selling it. Conversely, when growth is positive, the value of the country ’s currency tends to rise. This is because more traders end up buying the currency. Traders look at several economic factor…