What influences the Forex market?

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There can be many factors that can be considered that influence the forex market which can be the reason for such volatility in the market.

1. Inflation rates: Change in the inflation rate leads to a change in the currency exchange rates.

If the price of the goods and services increases at a very low pace then the value of the currency of that country increases.

And if the price of the goods and the services increases then that leads to the lowering of the value of the currency which also comes along with higher interest rates.

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2. Political stability: The countries with more political stability tend to attract more foriegn investors which will increase the capital and lead to the increase in the value of the domestic currency of the country.

3. Recession: When a country faces this recession phase, interest rate is likely to fall which decreases the chances of foriegn capital investment, making the currency weak.

4. Global Events: Any geo-political event or impending elections or crisis can affect the value of the currency.
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