I believe you have heard people directing to money as just a paper. Well, it's not just that. Money actually, defines every country's financial system. The financial systems, on the other hand, control the supply of money based on interest rates.
Following the abandonment of the gold standard, national currencies float against one another on a global market called, Forex. Currency prices vary in several circumstances like a nation's economic activity, interest rates, and geopolitical risks. Currencies change, produce financial risk and uncertainty, affecting capital and international trade.
The forex market owns an everyday exchanging size of over $5 trillion surpassing that of equities, bonds, and commodities markets. There occur events during currencies flow dramatically. Vibrations of those movements are exhibited throughout the world. Not everyone took advantage of the market, but for the ones who did, everything changed.
Firstly to mention I would like Mr. Soros. One of the most famous investors, he earned about £1 billion of his short-term position in pounds sterling. The event took place on the Black Wednesday of September 16, 1992. When the UK declared its farewell from the ERM and free-floating pound, the currency jumped 15% facing the Deutsche Mark, and 25% versus the US dollar. As an outcome, the Quantum Fund earned billions of dollars and Soros became the man that crushed the Bank of England.
Quite similar to him, Andrew Krieger joined Bankers Trust in 1986. Rated as one of the most aggressive and famous traders of that age. In the aftereffect of October 1987 where most markets persisted downwards by 20%, Krieger classified the New Zealand dollar to be extremely exceeded. He went low on the currency at a leverage of 400:1 passing the current volume of the currency. In some hours the currency jumped 5% versus the US dollar, Krieger achieved making $300 million for his company. He went on to work with George Soros in the future.
For the future, US-based investors consider the USD is in a temporal slump. They state to invest in powerful abroad markets for your profits to rise. All this because of the attraction in foreign currencies.
Unfavorable currency movements affect your investments, mainly if you have a high Forex display. Currency transits can have a large-scale impact not just on the national economy but also on the global one. Because currency movements can obtain a great risk over a large Forex exposure, traders practice various hedging tools.