Speculators can impact currency fluctuations from "summary" of International Money and Finance by Michael Melvin
Speculators play a significant role in the foreign exchange market as they buy and sell currencies with the expectation of making a profit. Their actions can lead to fluctuations in currency values, as they respond to changes in economic conditions, political events, and market sentiment. When speculators believe that a currency will strengthen, they will buy that currency, driving up its value. Conversely, if they anticipate a currency will weaken, they will sell it, causing its value to decline. This buying and selling activity can influence the supply and demand for a particular currency, leading to changes in its exchange rate. Speculators can amplify currency fluctuations by engaging in large, leveraged trades that magnify their impac...Similar Posts
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