what is it exactly that determines the value of a currency
It's much the same as anything that is bought or sold.
Say you needed to sell a house or a car. You would put it up for sale at what you feel is a reasonable price, but if there were no buyers at that price, you would either have to withdraw it from the market or lower the price until somebody is willing to pay what you ask. Of course if you had buyers lining up, you would realise that you were asking too little and maybe increase the price.
Market forces.
Events over the weekend may influence buyers or sellers and if there are more sellers than buyers when the market opens, the price will fall and vice-versa.
what is it exactly that determines the value of a currency, Im guessing its mostly supply and demand, but is there other factors, like dose economic data have a direct effect on price or is it just the peoples reaction to the news, and also what changes the value when the markets closed, like what causes that jump in the price over the weekend?
ok so I still don't fully understand, lets say it this way where do the brokers get the exchange rate, is there something like The WM/Reuters service that determines the rate
ok so I still don't fully understand, lets say it this way where do the brokers get the exchange rate, is there something like The WM/Reuters service that determines the rate
ok so I still don't fully understand, lets say it this way where do the brokers get the exchange rate, is there something like The WM/Reuters service that determines the rate
The way that I understand it is that most of the main brokers will have a dealing account with a number of banks, receiving a constant price feed from each one. There will be minor differences and so they will route their clients' deals to the bank with the more beneficial price. Beneficial to the client or the broker, who knows?
So brokers get their prices in much the same way as we do, as a price feed from the next higher level in the trading pyramid.
Rate is not determined by any body or organisation, just supply and demand. Each big bank will set its own rate according to the orders it receives. Obviously, if the bank is buying at a higher rate than the others, sell orders will be routed to that bank in preference to the other banks. This causes an imbalance of orders and so the bank will lower its buying rate. This happens over and over again with the imbalances constantly being corrected, so the price differentials are only maintained for very short periods, perhaps milliseconds?
thank you
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what is it exactly that determines the value of a currency, Im guessing its mostly supply and demand, but is there other factors, like dose economic data have a direct effect on price or is it just the peoples reaction to the news, and also what changes the value when the markets closed, like what causes that jump in the price over the weekend?