How is the exchange rate affected?
1, balance of payments. Balance of payments refers to the income and expenditure of a country in economic and trade exchanges with other countries. If a country's balance of payments is in good condition, that is, there is a surplus in the balance of payments, it will drive its currency to appreciate, and vice versa.
2. Economic foundation. A country's economic fundamentals, such as GDP, inflation rate and unemployment rate, will also have an impact on the exchange rate. The economic fundamentals determine the willingness of foreign investors to invest in the country and the demand of foreign investors for the country's currency. If a country's economy grows rapidly and its inflation rate is low, foreign investors will be more inclined to hold its currency, thus promoting its exchange rate appreciation.
3. Government policies. The national economic policy also has a great influence on the exchange rate. For example, the central bank can influence the supply and demand of money by changing interest rates and open market operations, thus affecting the exchange rate. The government's fiscal policy will also affect the exchange rate. For example, changing tax policy and increasing or decreasing government expenditure will affect the economy, thus affecting the exchange rate.
Is the foreign exchange market worth investing in?
There is no absolute answer to whether the market value of foreign exchange is worth investing. Investors should judge according to their own actual situation. The foreign exchange market has high investment income potential, but it also needs to have certain investment analysis ability. If investors can correctly grasp the market trends and changes in monetary policy, they can get relatively high returns in the foreign exchange market. At the same time, the foreign exchange market can also be used to achieve diversification of asset allocation. For example, in asset allocation, if investors predict that the exchange rate of the US dollar will rise in the future, they can exchange their domestic currency into US dollars in advance to realize appreciation. It should be noted that investing in the foreign exchange market also has high risks. When making decisions, investors should carefully analyze the market situation, formulate corresponding investment strategies, have good psychological quality, and don't blindly follow suit. In addition, for investors who do not have enough investment experience and risk tolerance, it is recommended to choose other investment products with lower risks.