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Exchange rates in the forex market fluctuate based on supply and demand for different currencies, influenced by factors like economic news, interest rates, and geopolitical events. When more people want a currency, its value goes up, while if there’s less demand, its value drops.
Economic Indicators: Reports on employment, inflation, and GDP influence currency values. Strong economic data typically boosts a currency's value.
Interest Rates: Changes in interest rates set by central banks affect currency attractiveness. Higher rates often lead to a stronger currency.
Political Stability: Countries with stable governments attract foreign investment, boosting their currency.
Market Sentiment: Traders' perceptions and reactions to news can lead to sudden price changes.
Supply and Demand: If more traders want to buy a currency than sell it, its value increases.
Geopolitical Events: Events like wars or elections can create uncertainty, impacting currency values.
Speculation: Traders buying or selling currencies based on predictions can lead to volatility.