What role Politics plays in Forex
Of all the factors that play a part in forex, politics is a very influential factor that is often forgotten.
There are endless political issues that can cause a currency to go up or to go down, traders take note of this as it affects their intentions to dabble in a particular currency. Here are some examples to better explain this.
Take, for example, a government that is very unstable. Politically, the government could change tomorrow without anyone really knowing what or why. All they know is that because the government is so unstable, the changes a new government could make would effectively ruin any sort of economic growth. For example, in Zimbabwe, because of politics, they have a ten million dollar bill and yet its value is almost nothing.
If a new government that is known to be more economically responsible, then this would have a good effect on the Forex market. This means that traders believe that when they invest in this particular currency, it has a good chance of going up over time as there won't be any tragic currency issues because the economy has responsible people at the wheel.
It is interesting to note that even when there is a lot of problems going on with the world's economy, one currency that is always high on traders list is the Swiss Franc as it is known to be quite safe.
These particular currencies that traders call 'safe havens', are ones that are always safe to put your money into, although they do not show much movement compared to others. They will not collapse the next day. Because Switzerland is categorized as isolationist, their Swiss Franc is a good example of a safe currency.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23210
There are endless political issues that can cause a currency to go up or to go down, traders take note of this as it affects their intentions to dabble in a particular currency. Here are some examples to better explain this.
Take, for example, a government that is very unstable. Politically, the government could change tomorrow without anyone really knowing what or why. All they know is that because the government is so unstable, the changes a new government could make would effectively ruin any sort of economic growth. For example, in Zimbabwe, because of politics, they have a ten million dollar bill and yet its value is almost nothing.
If a new government that is known to be more economically responsible, then this would have a good effect on the Forex market. This means that traders believe that when they invest in this particular currency, it has a good chance of going up over time as there won't be any tragic currency issues because the economy has responsible people at the wheel.
It is interesting to note that even when there is a lot of problems going on with the world's economy, one currency that is always high on traders list is the Swiss Franc as it is known to be quite safe.
These particular currencies that traders call 'safe havens', are ones that are always safe to put your money into, although they do not show much movement compared to others. They will not collapse the next day. Because Switzerland is categorized as isolationist, their Swiss Franc is a good example of a safe currency.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23210
About the Author:
Stuart Baker has been online forex trading for a number of years and has used a number of different online trading platforms. One such platform which has been designed with the current economic environment in mind is The Forex Phantom. Please visit his blog here at The Forex Phantom Blog
posted by X - Men @ 3:54 AM
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