Chaos in the currency market

Submitted by: Harrison

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Speculators are the part of the currency markets that take currency positions based on anticipated interest rate movements in various countriesDay-to-day speculation on future exchange rate movements is commonly driven by signals of future interest rate movementsBy using the signal, speculators usually take the position before the things actually occurredSometime, if high power enough, the speculators position can influence the exchange rate movement The government controls is one of the factors affecting exchange rateThe government can influence the equilibrium exchange rate in many way, including direct intervening (buying and selling currencies) in the foreign exchange markets and indirect intervening by affecting macro variables such as interest rates. 2