The Special Drawing Right (SDR) is an international reserve asset. Created by the IMF in 1969, SDRs are used to facilitate transactions and supplement IMF member country reserves. An SDR is a [...]
Currency is any form of money officially issued by a governing body or central bank to be used as legal tender. Dating back to 9000 B.C., currency has assumed many unique forms ranging from basic raw materials to futuristic polymer banknotes. No matter the geographical region or chronological era, currency plays an integral role in trade and international commerce.
It has been said that a good indication of a country’s economic health is the value of its money. Presidential and parliamentary elections often influence the value of both domestic and foreign currencies. Issues such as a nation’s trade balance, industrial production and inflationary concerns often play key roles in the election of a political candidate to public office. The result of a hotly contested election can lead to a sudden rise or fall in the perceived value of a nation’s money.
In addition, volatilities facing global commodity pricing can cause dramatic international exchange rate fluctuations. The market value of crude oil, natural gas and precious metals often prove to be correlated with currency pricing. Definitive moves within these markets can have a widespread impact upon the foreign exchange market as a whole.
The over-the-counter foreign currency market, known simply as forex, provides a platform for traders and investors to attempt to capitalize upon exchange rate volatilities. The forex market is the largest global marketplace, boasting an average daily turnover eclipsing US$5 trillion. An abundance of trading options, liquidity and limited barriers to entry entice many traders and investors to make forex their preferred financial market.
This article contains general information and does not represent trading advice.