The Forex Market is the main monetary market in the world. Every day people from every corner of the globe contribute to a massive $4 trillion worth of business. Keeping up to date with current events can be vital when balancing the risk of any trades you may be contemplating.
Natural disasters are generally unpredictable and their impact on the forex market can be significant. Events such as earthquakes, floods or tornadoes have potentially serious consequences to both the emotional and financial health of a region. Damage to infrastructure will unavoidably affect the economic capabilities of the area and the cost of rebuilding and re-stocking after a natural disaster will inevitably take away from commercially advantageous projects that may have been in the pipeline. Natural disasters bring with them a sense of insecurity and uncertainty which is bound to affect the strength of the currency and the attitude of potential investors.
Any potential change in leadership affects the economy of a country. Uncertainty breeds caution and a change in the political direction of a country can mean a monetary U-turn, or at the very least changes to existing fiscal policies. This can affect the value of the relevant currency, although not always negatively. An unexpected election has a greater impact, especially if accompanied by controversy. Again, uncertainty is the driving factor in this situation, even if the eventual outcome is generally regarded as positive.
War can hit the economy of a country like a thunderbolt. The damage to a country’s infrastructure, its moral and financial standing can be devastating. Even once the war is over, the cost of putting the country back together will need to be diverted from elsewhere in the budget. The lack of confidence in the market caused by conflict can continue to reverberate long after the last shots have been fired.
Any currency on the Forex Market can only ever be as strong as the overall economic power of the country itself. Any situation which causes uncertainty will inexorably lead to volatility in the markets. While natural disasters can generally not be predicted, if you have an interest in Forex trading it is always advisable to have an idea of the natural risk factors which could affect countries of interest. Add to this a keen awareness of current affairs and the ability to react quickly to events and you can certainly help to avoid investing in currencies on the forex market that carry a potentially heavy risk.