There are a lot of factors that can play a part in Forex. One of the most influential factors that people don’t typically take into consideration is politics.
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.
If a countries government is very unstable, it could change overnight without anyone really knowing what or why. The changes a new government could make to its economy could drastically change its growth. This is the only thing that anyone could know for certain. If you look at Zimbabwe’s economy, because of its poor political and economic choices, they have a 10 million dollar bill that is almost completely worthless.
Another time that things can be good in Forex is when there is a new government coming in that is known to be a lot more fiscally responsible. What this means is that the traders believe that if they invest in this currency, it will go up over time because there won’t be any diabolical currency problems because the economy will have responsible people at the helm.
Interestingly, when there are a lot of issues with the economy of the world, one of the currencies that is always snapped up is the Swiss Franc because it is known to be very 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.
As a trader, you can see how important it is to look at this sort of situation. However this is not the only factor that a trader should look into when considering dabbling in Forex.
By JamesDeMers from Pixabay