Jargon Busters

What factors affect exchange rate movements?

World currency markets are a 5 trillion dollars a day market. As such, all kinds of global interests come into play, from a tourist arriving at a foreign airport to a government receiving foreign aid. Currency markets are a zero-sum game, so if your currency is appreciating or depreciating, this is at the expense of another currency or gold. In this way it makes it a unique financial instrument.