Do politicians affect the price of currency?

The value of currency matters to us all. Whether you are a holidaymaker looking to afford the vacation of your dreams, an investor cashing in on the chance to make money or a business engaged in importing or exporting goods, the fluctuating forex market attracts attention from all corners. The value of a nation’s currency is also a key test of the health of its economy too.

But why does it fluctuate? Forex is renowned for being the most volatile market – although maybe cryptocurrencies can lay claim to that mantle – and that’s partly because so many factors feed into the prices we see.

Price movements are dictated, as with any asset, by supply and demand. If demand for a currency goes up and the supply remains constant, the value goes up. The key, therefore, is to look at what could spark that demand and, put simply, this comes from positive economic news. If things are looking up – and there’s growth forecast – then demand for a currency will grow.

It’s in this context that, as DailyFX has demonstrated, politicians play a big role. The things they say and do have the power to shape the narrative around an economy and, therefore, the demand. Whether it’s key set piece speeches, off the cuff tweets or dramatic interventions such as calling a snap election, DailyFX’s interactive guide shows how the forex markets react to big news events involving key world leaders.

Clearly, politicians aren’t solely responsible for big movements in the markets, but their influential role in the spotlight means that what they say and do matters a lot – and this can easily filter through into the price of currencies.

This is a sponsored press release and does not necessarily reflect the opinions or views held by any employees of NullTX. This is not investment, trading, or gambling advice. Always conduct your own independent research.


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