Post by Norman Wells Post by pensive hamster Post by Norman Wells
You can attach whatever credence you like to speculators. I tend not to
though. They're only ever acting in their own self-interest. Lies and
deceptions are how they roll.
How else would you propose establishing the exchange rate
between various currencies?
The only other way is by State control, which some countries do and
regard as the best way. If you believe in a free market economy,
however, I guess you're always in the hands of speculators who will
sometimes make your holidays and imported goods that much more (or less)
expensive, depending on their greed.
It's not clear what you mean by State control. States still
have to operate within the free market, and are subject to
the market forces of supply and demand.
The only ways they can "control" or influence exchange rates
are by trying to increase the demand side, by buying large
amounts of their own currency; or alternatively by trying to
increase the supply side, by holding large reserves of their
own currency, ready to sell when they judge that is the
Post by Norman Wells
If you're in the hands of speculators, though, there is little
correlation between the exchange rate and the overall state of the
economy, and I think it's misleading and foolish to use it as an indicator.
Again, it's not clear what you mean by "the overall state
of the economy" (TOSOTE). If there was some way of
objectively quantifying TOSOTE, then you could have lots
of brightly-coloured graphs demonstrating, or failing to
demonstrate, a correlation between TOSOTE and the
'Factors That Influence Exchange Rates
'Floating rates are determined by the market forces of supply
and demand. How much demand there is in relation to supply
of a currency will determine that currency's value in relation to
another currency. For example, if the demand for U.S. dollars
by Europeans increases, the supply-demand relationship will
cause an increase in price of the U.S. dollar in relation to the
'There are countless geopolitical and economic announcements
that affect the exchange rates between two countries, but a
few of the most popular include: interest rate decisions,
unemployment rates, inflation reports, gross domestic product
numbers and manufacturing information. ...'