Risk aversion refers to when traders unload their positions in higher-yielding assets and move their capital in favor of safe-haven currencies.
This normally happens in times of uncertainty and high volatility.
In the forex market, currencies that have relatively higher interest rates are regarded as higher-yielding currencies.
These currencies are seen as “riskier” assets.
In times of risk aversion, traders tend to sell their positions in these currencies.and buy “safe-haven” currencies.
This normally happens in times of uncertainty and high volatility.
In the forex market, currencies that have relatively higher interest rates are regarded as higher-yielding currencies.
These currencies are seen as “riskier” assets.
In times of risk aversion, traders tend to sell their positions in these currencies.and buy “safe-haven” currencies.
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