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Where is the Global Exchange Market Moving? Things to Expect in 2023

Where is the Global Exchange Market Moving? Things to Expect in 2023

27 Jan 2023

Are you planning to send money abroad in the coming year? You should be aware of the forex trends so that you can exchange foreign currency for your local currency at the most affordable rates.


This guide explores the macroeconomic overview of the forex market for the coming year. It also examines the potential impact that the evolution of the main currencies could have on smaller currencies so that expats can prepare themselves in advance.


What is the Foreign Exchange Market, and How Does it Function through the Global Economy?


A global marketplace where buyers and sellers from all corners of the globe anticipate trillions of dollars of trades each day is known as the Forex market. Foreign exchange market trading is a global activity that is affected by macroeconomic events worldwide.


What Causes Changes in the Forex Market?

Following are some important factors that affect the volatility of the forex market.

  • Inflation has the biggest impact on forex markets.
  • Commodities, bonds, or stocks strongly influence changing exchange rates.
  • Trade deficits, surpluses, and other international trade numbers play a vital role in forex markets.
  • A huge amount of money transfers made to a country might affect its exchange rate.

Global Exchange Market in 2023 Will Be Volatile. 

Experts argue that the world economy is in an unprecedented situation, and such a recession has rarely been in the forecast so far in advance. Many economies are on the verge of collapse, including the Eurozone, the UK, and the countries where the housing bubble has seen significant inflation in recent years, such as Canada and Australia.


Whereas the US could avoid such depreciation if the real estate sector, which accounts for 5% of US economic growth, does not falter in the coming months. This is a momentary drop, reflecting market adjustment, not market collapse.

Experts believe that 2023 can be expectedly a better year in terms of the stock exchange compared with 2022.


Nevertheless, they indicate that global recession can’t be ignored while some critical headwinds like rising inflation, interest rate hikes, and uncertain global circumstances can severely temper the stock market’s performance. Expatriates working in foreign countries who send money home to support their families must remain up-to-date with the global exchange market’s updates.


Global Economy Predictions for 2023

  • The global central banks will be more focused on controlling inflation than on maintaining or encouraging economic growth in late 2022 and early 2023. This has happened for the first time in the last twenty years.
  • The monetary policy cliff will be daunting in 2023. In 2022, the monetary policy tightening ramped up worldwide with an interest rate hike of 274 at the beginning of 2022. The same trend will be followed.  
  • While central banks will remain stubborn in containing inflation, they will tread a difficult line with the global economy slowing down and might enter a recession.

A Solid Dollar against the Euro in an Unpredictable Currency Market

In the forex market, the prediction of recession means a return to volatile conditions and depreciation of the US dollar. Experts believe that the US dollar is highly overvalued against most currencies. For example, the US dollar is 28% overvalued against the Euro when measured with the real exchange rate.


Few analysts say that there is a possibility of coordinated interventions in the currency market by economically strong countries, just like in the case of the Plaza Accord in 1985. The world is still quite far from the exaggerated levels of that time, so people are bound to see individual central bank interventions to restrict the deterioration of their national monetary standards.


According to the currency exchange forecasts, the euro/dollar exchange rate will trend upward in 2023. It will start from a threshold of $0.90/euro in the beginning to $1.05/euro in the middle of 2023, ending at $1.08/euro. Undoubtedly fluctuating exchange rates will impact every global money transfer that expatriates typically make for their families from overseas.


International companies will be exposed to currency risks but will continue to work in the highly volatile business environment. To stay competitive in foreign markets, they should anticipate market fluctuations and develop medium and long-term forecasting set-ups. They should consider implementing a prevarication strategy.


Regression of the Leu against the Euro

Predictions for the evolution of the leu in 2023 are slightly pessimistic. Several factors will influence the exchange rates in 2023. However, the main factor remains inflation. The leu will weaken against the European currency if you see a reduction in inflation.


The current appreciation of the leu is transitory and directly influenced by foreign investors and strict liquidity management practised by the National Bank of Romania.


The national currency of Romania will depreciate against the euro over the next year. The expected average exchange rate for the first six months of 2023 can be 4.95 – 4.98 lei per euro. Meanwhile, the 12-month horizon is expected to be 5.03 – 50.5 lei per euro.


How to Send Money Abroad Conveniently in 2023?

The fluctuating exchange rates can cause a lot of trouble for expats who have to send money to their home countries. The downgrading trends of the forex market suggest that currency exchange can be financially straining for hardworking expats, especially if they choose bank transfers to send remittances.


Banks and other financial institutions deliberately keep their exchange rates low and static. It is best to stick to online money transfer services in 2023.


ACE Money Transfer - One of the Leading Remittance Service Providers

ACE Money Transfer is an industry leader when it comes to sending remittances. Even with the fluctuating market, ACE offers the best exchange rates. More than a million expat workers across the UK, Europe, Canada, Australia, and Switzerland, use ACE’s solutions to transfer funds to their loved ones in 100+ countries.7


ACE Money Transfer Offers Quick and Affordable International Transactions

ACE Money Transfer offers the lowest transfer fee with speedy transactions. The transfer fee is flat with no hidden charges. All transactions made with ACE are completed within a day.

The current global economic and political situation will cause vitality in the forex market in the coming year. Your best option to send remittances would be an online money transfer through ACE. Sign up for free today.


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