Henry Mason Smith#96

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How do emerging markets influence forex?

Emerging markets (EM) contribute significantly to global forex through growth, trade, and volatility. Currencies like BRL, TRY, or ZAR attract traders seeking high yields. Institutions allocate to EM for diversification and returns, but hedge against instability. Retail traders are drawn by volatility but face risks of illiquidity and policy shocks. Benefits: opportunities from high carry and strong growth cycles. Risks: vulnerability to capital flight, political crises, and external shocks like USD strength. EM forex trading offers high potential reward but demands caution—volatility is both friend and enemy.