Geo-political events and interest rates set by the Central Banks can influence Forex and drive the price up or down in the currency market, thus affecting your open trading positions. The main interventions by Central Banks are interest rates, changes in monetary policy and tax rules.

Financial factors are critical and an abrupte change in those may create some extra volatility in the market and the the price action of the currencies involved.

Part of our multimedia library, learn in this video tutorial what are interest rates and politics in Forex and how it can affect your trading positions.

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There are many factors affecting a currency value in relation to another: political stability, economic growth rates, savings and capital formation, natural resources or a government that encourages the development of these resources, etc. If you would like to know more about interest rates and politics in Forex, please read our complete article How do Interest Rates Affect the Forex Market.