How Do Politics and Central Banks Impact FX Markets?
When it comes to geopolitical issues, international finance, world economics and the fluctuating value of currency rates, there is no better place to learn about political and economic trends than on the internet. With the various e-newsletters and forums online discussing political events in the world, there is no better time to ask questions about political and financial matters.
As markets have been sliding steadily downward over the past year, the debate between the political and economic outlook for the world economy has been heating up. Having some time to reflect, the world’s leading economies and political leaders have already come to a consensus that monetary policy and financial policies will be altered accordingly. The potential economic repercussions have yet to be explored, but in a world of ever increasing uncertainty, all governments will be spending more time researching the world’s currency markets.
For years now, world leaders have been discussing the political situation in various countries around the world. Looking at the world as a whole, they have agreed that the political situation in North Korea and Iraq is a prime example of how these two countries are developing. In the past, the political situation in these two countries has been detrimental to world economies and citizens, as their unstable political circumstances have left the nations without a stable flow of currency.
Not all countries are unstable though, and the political situation in some countries such as Iran and Venezuela has prompted the likes of Al Gore and others to point out the dangers of political upheaval and instability. The two countries were given a clean bill of health by their own respective governments when the situation was under control, however, with both of the governments’ influences waning it is looking like the political situation is again causing problems for the world economy.
Although the world’s governments agree that currency values are becoming too unstable, the US dollar has seen its value become incredibly volatile over the past year. The downfall of the US dollar to recently make a new all time low occurred because of the unwinding of a housing bubble, yet politicians have claimed the country is now safe, with the economy being driven by the one reliable market – the bond market.
Most politicians on both sides of the aisle will have stated that there should be more transparency and accountability from the Federal Reserve and other central banks. However, the politicians who recently lost an election have claimed that the political leaders are taking advantage of the situation. With the state of the world’s finances seemingly out of control, most countries and political leaders agree that changes need to be made.
Political and financial pundits have disagreed on the specifics of the political and economic situation. However, most believe that the political situation is more of a symptom than the real problem. The financial conditions for many countries, including Australia, are now beyond their means, which has forced many governments to cut back on the areas of their budgets that they had planned to increase.
In addition to the political turmoil, economic factors in the United States have led to the release of negative US GDP figures, which has caused global markets to take a major hit. Major financial institutions, such as Wall Street, have failed as a result of increased governmental pressure and subsequent closures.
The economic meltdown has also led to a potential slowdown in the growth of the world economy, which has caused many to declare the situation to be over. Politicians and analysts who are warning that the US economy is in serious trouble, and will experience significant decline, however, continue to believe that the situation is only temporary. The financial meltdown has caused many global markets to plunge, which has lead to the credit crunch, which has caused the European economy to sink deeper into recession.
When the leaders of some countries admit that their political situations are directly linked to the decline of the global economy, it is clear that this is something that is worth examining. The economic decline of some countries can directly affect the value of their currency. This could have a massive impact on the value of other countries’ currencies, and the movement of global currency markets.
When governments start devaluing their own currencies, it can cause drastic swings in the values of other currencies, which means that the movement of global currency markets is affected, which could have a major implications on the economic well-being of the world. and its citizens.