Factors Causing Foreign Exchange Volume Growth

The foreign exchange market is now considered the absolute largest market in the world. The market’s enormous success is due to the fact that the sole asset it deals in is, without a doubt, the only asset in the world that possesses absolute market liquidity: money.

The foreign exchange market deals basically in the trading of currency, which in essence means buying one currency by exchanging it for another. The value of currencies in relation to each other is in a constant state of flux, which allows people to make a profit by purchasing a currency during a period of stability and then selling it off if the value of the currency spikes.

The most stable currency is often considered to be the dollar. This is due to the fact that the American dollar has a reputation for solidity and stability. However, this once universally well regarded currency seems to be going through a downward spiral. This is due to several factors that have resulted in the depreciation of the American dollar, following a sudden foreign exchange volume growth of currencies being exchanged in the market.

In recent times, America has made certain economic and political moves that many countries considered to be hostile. Additionally, America’s political maneuvering has backfired in certain countries where it was trying to gain political leverage. A very poignant example of this is America’s involvement in the lifting of sanctions against Iran. America’s under the table economic war against Iran has always been related to nuclear weapons. The United States used its powerful economy and its status as the world’s major cultural exporter to leverage Iran’s abolition of its nascent nuclear program.

The economic sanctions imposed by America and the other four permanent members of the UN security council, these nations being the UK, France, Russia and China, as well as Germany, resulted in an intense downward spiral of the Iranian economy, which in turn resulted in massive depreciation of the Iranian currency, the Rial.

This resulted in the appearance of a unique trend among Iranians. They would change the Rials they possessed into dollars in order to preserve the value of the money they had earned. However, recently the economic sanctions placed upon Iran were lifted after Iran agreed to abolish its nuclear program. This resulted in the appearance of a steady increase in the value of the Rial, causing people who had invested in the American dollar to convert their money back into Iranian Rials. This resulted in a flurry of activity in the Foreign Exchange Market, as the sudden overflow of dollars into the market began to undermine the value of the dollar.

Additionally, there are several middle eastern countries with powerful currencies that were pegged to the dollar. However, this sudden depreciation of the dollar ended up creating a financial climate that forced people investing using these currencies to shift to different currencies, further increasing the volume of foreign exchange being conducted.