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Financials Trading markets are divided into four parts, rather pillars and they are,
FOREX – Currency Trading makes or Break Country’s fortune and mainly controlled by Respective Central Bankers on behalf of National Governments, anyone who is active in Stock Market long enough is aware of words like Dollar Index, Currency Carry Trade, etc.
Currency Devaluations is used to impact country specific exports, therefore effecting world Trade & fiscal deficit of other country. Whereas, Currency Appreciation is used to impact Capital Investments & long term Infrastructure Spending.
In other words, neither Currency Devaluations nor Appreciation is good or bad for Country Finances per-se. Rather, mere tools to achieve elected governments policy initiatives and long term goals but that does effect short term price movements in Stock Market.
Conclusion: Too much Devaluations or Appreciations especially in short term is very negative. FOREX effects everything else like BONDS, COMMODITY & STOCKS.Read More »
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