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Currency strength expresses the value of currency. For economists, it is often calculated as purchasing power, [1] while for financial traders, it can be described as an indicator, reflecting many factors related to the currency; for example, fundamental data, overall economic performance (stability) or interest rates.
Stocks outperforming investor expectations is a sign of a strong economy. This makes a currency more appealing to foreign investors. Conversely, an underperforming stock market might drive foreign ...
In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value.Factors contributing to a currency's hard status might include the stability and reliability of the respective state's legal and bureaucratic institutions, level of corruption, long-term stability of its purchasing power, the associated ...
Relative currency strength (RCS) is the purchasing power of a currency when traded against other foreign currencies, or used to trade products. [1] It is also a technical indicator used in the technical analysis of foreign exchange market (Forex). It is intended to chart the current and historical strength or weakness of a currency based on the ...
For example, a surge in purchases of foreign goods by home country residents will cause a surge in demand for foreign currency with which to pay for those goods, causing a depreciation of the home currency. And the other way around, if there is an inflow of foreign currency to a country, it creates demand for the home currency.
A strong dollar is recognized to have many benefits but also potential downsides. Domestically in the US, the policy keeps inflation low, encourages foreign investment, and maintains the currency's role in the global financial system. [2] [3] Globally, a strong dollar is thought to be harmful for the rest of the world. [4]
Foreign currency is commonly bought or sold on foreign exchange markets by travelers and traders. Communities can change the money they use, which is known as currency substitution. This can happen intentionally, when a government issues a new currency. For example, when Brazil moved from the Brazilian cruzeiro to the Brazilian real.
A dominant currency may be used directly or indirectly by other nations: for example, English kings minted the gold mancus, presumably to function as dinars to exchange with Islamic Spain; colonial powers sometimes minted coins that resembled those already used in a distant territory; and more recently, a number of nations have used the US ...
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