In these turbulent times, the roller-coaster-like ups and downs of currency values are a recurring theme in the daily news. Currency values are in a state of constant flux, and over the past twelve months some have experienced record highs, while others have slipped to all-time lows. If you are curious about the foreign exchange market and would like to learn more about how the value of money is determined, then you should check out the below info-graphic from All Finance Tax.
Understanding The Forex
At the moment, there are over 100 official currencies circulating the globe. These can be traded in the foreign exchange, or “forex” market. The largest financial market in the world, it is estimated that the forex is worth a staggering $4 trillion a day. Fluctuating currency values are keenly watched by traders such as banks, corporations, and investors scattered all over the world.
How Are Currency Rates Calculated?
There are numerous factors that can contribute to the rise or fall of a currency’s value. However, it all boils down to the law of supply and demand. If there is ample supply of a particular currency, then its value will be lower. Conversely, a limited supply will bring about an increase in value. The below infographic looks into some of the factors that can affect the supply-demand balance and consequently determine currency rates.