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FXClub.com Tip: Currency exchange rates fluctuate for many reasons. If a country experiences an increase in either speculative or transaction demand for its currency, the relative exchange rates will go up.
Good news such as the launch of a high profile space mission or new trade agreement will increase demand for a currency and positively impact its trading rate. On the other hand, negative news such as a terrorist attack or natural disaster can cause a currency to devalue.
Transaction demand is impacted also by the country GDP, key businesses and deals, and unemployment rates. Central banks usually accomodate speculative demand by adjusting interest rates.
|Sheri Ann Richerson|