how does Currency get stronger?
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This entry was posted on Wednesday, June 2nd, 2010 at 8:12 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
June 2nd, 2010 at 8:12 am
It generally depends upon productivity, monetary policy, and public debt. The more debt a country takes on, the lower their currency value compared to other countries. If one country’s currency loses value, all the others gain value compared to them (if they are a trading partner).
The looser the monetary policy, the lower the strength of the currency. In other words, if a country prints money to stimulate growth, it’s currency declines. However, if it raise interest rates, it’s currency strengthens.
If a country improves productivity, it’s currency will strengthen.
June 2nd, 2010 at 8:12 am
Currencies get stronger or weaker comparing them to other currencies. When a country goes thru inflation, its currency value decreases (nationally and globally) because there are more bills and coins but no more goods in the country. On the other hand, when a country is doing good (high production, low or none external debt) it’s currency value increases.
PS: I’m trying to explain this in simple words. There are many, many issues that come to mind when you discuss currency value or inflation.