Short-term volatility factors affecting the foreign exchange market

{}Posted in2023/2/25 23:51:41 | 5Browse

cashback forexternational rebatesforexbroker best forex rebate company fxrebatecentral foreign exchange forexrebatecomm bestforexrebatecompanysions fluctuate daily roughly between 0.8% and 1.5% (that is, one to two cents, in foreign exchange market terms is 100 points to 200 points), fluctuations can reach more than 5% (that is, 700 points to 1000 points) foreign exchange market exchange rates regularly fluctuate greatly illustrates the two main characteristics of the foreign exchange market : first, the risk is very large; second, the possibility of huge profits in the foreign exchange market investment exists for the foreign exchange market often appear short-term sharp fluctuations, economics called overreaction to information (overshooting) for what is the foreign exchange market overreaction, economics has always been a debate, there are now roughly the following three explanations: first, the spot price of foreign exchange The spot price of foreign exchange and the long-term equilibrium price of foreign exchange rates deviated people often talk in the newspaper, a certain currency exchange rate is currently overvalued, or a certain currency exchange rate has been far below its reasonable price these words refer to this phenomenon foreign exchange spot price excessively deviated from the long-term equilibrium price of foreign exchange can also be explained by a variety of reasons, may be the spot price is too low or too high, may also be The long-term equilibrium price is estimated to be too low or too high From the point of view of the market operation itself, when there is not enough speculative capital (very little trading in the market), or when there is too much speculative capital in the foreign exchange market (overheated market trading), the fluctuation of the spot price over its long-term equilibrium price is not an incomprehensible phenomenon Second, the short-term equilibrium price fluctuation of foreign exchange will always exceed its long-term equilibrium This explanation assumes that all the factors that will affect the foreign exchange market will have a role in the price fluctuations of foreign exchange, but the effect of this role in time and channel differences, resulting in short-term equilibrium price deviation from the long-term equilibrium price of foreign exchange short-term equilibrium price deviation from the long-term equilibrium price of the phenomenon, the current economics popular explanation is that when the government to expand the money supply or lower interest rates, the market prices The foreign exchange market reacts quickly, and the exchange rate of the national currency falls sharply, so that the short-term equilibrium price of foreign exchange is excessively lower than the long-term equilibrium price, and when the price of goods in the fully digested money supply growth factors will rise, the actual money supply will fall, the short-term equilibrium price of foreign exchange will gradually recover to converge with the long-term equilibrium price Third, the foreign exchange market is not an efficient market. The foreign exchange market is not an efficient market, that is, the fluctuation of foreign exchange prices can not fully reflect the market in a certain period of time all the information that appears, resulting in the actual price of foreign exchange often excessively deviated from the equilibrium price of foreign exchange market short-term sharp fluctuations may be due to market participants subjective exclusion of certain information, one-sided acceptance or excessive acceptance of certain information, so that foreign exchange prices are excessively distorted; may also be some of the impact of Foreign exchange fluctuations in the information masked some other equally important information, resulting in large fluctuations in foreign exchange prices Second, if the foreign exchange market is not an efficient market, it will lead to some corrective actions in the market, such as profit-motivated speculators to intervene in the market, the need to accurately release information affecting the market, government intervention, etc. These corrective actions will sometimes make the actual price and the equilibrium price convergence, and sometimes it will further distort the market price. Sometimes it will further distort the market price fluctuations from the actual volatility of the foreign exchange market now, the foreign exchange market in the long term may be an information efficient market, but in the short term is still far from proof of the current foreign exchange market daily fluctuations of the biggest impact is the news, it includes economic and political two categories in addition, the market investors willingness and psychological factors, and often make these news on the foreign exchange market Further expanded

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