Open Access
Journal Article
Foreign Exchange Market Dynamics
by
Daniel Jackson
Abstract
The foreign exchange (FX) market, often referred to as the largest and most liquid financial market in the world, is characterized by complex dynamics driven by various economic, political, and social factors. This paper delves into the intricate mechanisms that govern the dynamics of the FX market, examining both the micro and macro perspectives. It discusses how currency exch
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The foreign exchange (FX) market, often referred to as the largest and most liquid financial market in the world, is characterized by complex dynamics driven by various economic, political, and social factors. This paper delves into the intricate mechanisms that govern the dynamics of the FX market, examining both the micro and macro perspectives. It discusses how currency exchange rates are determined, influenced by factors such as interest rates, inflation, trade balances, and investor sentiment. Additionally, the paper explores the role of central banks, financial institutions, and electronic trading platforms in shaping the market's behavior. The analysis further investigates the impact of emerging market currencies on the global FX landscape, as well as the implications of technological advancements and regulatory changes. Through a comprehensive examination of these dynamics, the paper aims to provide insights into the complexities of the FX market and contribute to a deeper understanding of its role in global finance.