Explain and narrate all those important factors having influence on forex markets movements more frequently.

The factors that influence the forex markets measurement are: Foreign Exchange Rates - Fundamental factors Balance of Payments - Surplus leads to a stronger currency while a deficit resulting to weakening of a currency. Economic Growth Rates - Rise in value of imports leads to a fall in the currency and vice- versa. Monetary Policy - The way Central bank attempts to influence and control interest rates and money supply. Interest Rate - High interest rate attracts overseas capital and appreciates currency in short run, in the longer term, however high interest rates slow the economic growth, thus weakening the currency. Foreign Exchanges Rates - Technical factors Governance Government Control - This can lead to unrealized value of currency resulting in violent exchange rate. Speculation - Speculative forces can have a major effect on exchange rates. Alternative Answer 3(b) Interest Rate Differentials : Higher rate of interest for an investment in a particular currency can push up the demand for that currency, which will increase the exchange rate in favour of that currency. Inflation Rate Differentials : Different countries' have differing inflation rates, and as a result, purchasing power of one currency may depreciate faster than currency of some other country. This contributes to movement in exchange rate. Government Policies : Government may impose restriction on currency transactions. Through RBI, the Government, may also buy or sell currencies in huge quantity to adjust the prevailing exchange rates. Market Expectations : Expectations regarding change in Government, change in taxation policies, foreign trade, inflation, etc. contribute to demand for foreign currencies, thereby affecting the exchange rates. Investment Opportunities : Increase in investment opportunities in one country leads to influx of foreign currency funds to that country. Such huge inflow will result into huge supply of foreign currency, thereby bringing down the exchange rate of the concerned country. Speculations : Speculators and Treasury Managers influence movement in exchange rates by buying and selling foreign currencies with expectations of gains by exploiting market inefficiencies. The quantum of their operations affects the exchange rates.