Forex as a Hedge
Commercial enterprises doing business in foreign countries are at risk due to fluctuations in the currency value when they have to buy or sell goods or services to another country. Hence, the foreign exchange markets provide a way to hedge the risk by fixing a rate at which the transaction will be concluded at some time in the future.
To accomplish this, a trader can buy or sell currencies in the forward or swap markets, at which time the bank will lock in a rate so that the trader knows the exact exchange rate in order to mitigate his or her company's risk. To some extent, the futures market can also offer a means to hedge currency risk, depending on the size of the trade and the actual currency involved. The futures market is conducted in a centralized exchange and is less liquid than the forward markets, which are decentralized and exist within the interbank system throughout the world.
Forex as Speculation
Since there is constant fluctuation between the currency values of countries due to varying supply and demand factors such as interest rates, trade flows, tourism, economic strength and geopolitical risk, an opportunity exists to bet against these changing values by buying or selling one currency against another in the hopes that the currency you buy will gain in strength or that the currency you sell will weaken against its counterpart. (For additional reading, see "Top 6 Questions About Currency Trading."
Currency as an Asset Class
There are two distinct features to currency as an asset class:
You can earn the interest rate differential between two currencies.
You can gain value in the exchange rate.
Why We Can Trade Currencies
Until the advent of the internet, currency trading was limited to interbank activity on behalf of their clients. Gradually, the banks themselves set up proprietary desks to trade for their own accounts, which was followed by large multinational corporations, hedge funds and high net worth individuals.
With help from the internet, a retail market aimed at individual traders has emerged, providing easy access to the foreign exchange markets, either through the banks themselves or brokers making a secondary market. (For more on the basics of forex, check out "8 Basic Forex Market Concepts."
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FOREX-Dollar holds gains vs yen, trade worries linger as China PMI looms:
The dollar held firm versus the yen on Friday, supported by quarter-end buying as well as an absence of any fresh escalation in trade-related tensions between the United States and its major trading partners.
Still, trade worries look set to dominate the market with traders increasingly worried about the impact of Sino-U.S. trade disputes on China’s economy.
The dollar firmed to 110.49 yen, having made gains for the last three sessions and nearing this month’s high of 110.905, helped by seasonal buying at the end of quarter and half-year.
The yen, which tends to be bought on signs of economic stress because of expectations of Japanese asset repatriation, also lost some support after U.S. President Donald Trump indicated he would take a softer approach on Chinese investments in U.S. technology companies
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There are basically three reasons Bitcoin isn't working out as a money - two innovative, and one monetary. Mechanically, Bitcoin has a tendency to be ease back and relentless to utilize in light of the fact that it checks exchanges in little squares. That issue isn't especially difficult to defeat - simply utilize greater squares, or utilize a type of brief credit to facilitate the weight on the system. All the more unfavorably, Bitcoin depends on individuals known as diggers to confirm all exchanges, and repays them by making new Bitcoins. Yet, soon, this will stop, since the aggregate number of Bitcoins is topped at 21 million - by then, exchange charges will be expected to pay mineworkers
FF Asia is the premier South-East Asian forum on retail foreign exchange (Forex) trading. The community has attracted more than 24,000 traders since inception. The website serves its special interest network including media partnerships with event organizers, online discussion forums, social network, copy trading, provide economic report data, trading blogs and broker informational data.