Demand and Supply moves the Forex Market

Forex market is mostly controlled by the universal forces of demand and supply besides world news events.A free floating market such as the forex market runs on traders expectations of future movements of the exchange rates.Foreign exchange trading is also of concern, bedsides the traders, to the common individuals also because goods including clothing, food may be materialized abroad.
As mentioned earlier, an open market as such as Forex works on the principles of demand and supply:
• High supply leads to lower prices, high demand will cause prices to rise
• Abundant supply makes the prices fall
• Similarly, scarcity in supply leads to increased prices
• Higher demand will lead to higher prices; higher supply causes prices to fall

Theoretically, any nation’s currency exchange rates are thus determined by the interaction between the demand and supply. In international trading, a particular currency can be readily available if a lot of investors are selling it at the same time. In case there isn’t an equivalent demand for that currency, prices will move southwards in order to “balance” the demand and supply. The direction in which the currency furthers can cause the cash inflow or outflow of that currency. An appreciation in the currency will cause cash inflow into the country’s assets because investors and traders will take long position to benefit from it.