value forex trading

ShaguftaT

Newbie
Jan 11, 2019
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I was learning about forex trading strategies. I wanted to know how the forex value strategy based on REER works.
 

Enivid

Administrator
Staff member
Nov 30, 2008
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Odesa
www.earnforex.com
One value investing strategy involving real effective exchange rate that i can think of is comparing the currency's REER vs. its spot exchange rate and buying the currency if its spot exchange rate is well below its REER. However, this approach is still quite risky because REER incorporates only trade and inflation data, ignoring many other important factors, such as interest rates for example. Also many currencies, which are "undervalued" according to their REER value are often manipulated (or mismanaged) by their governments.