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Tag Archive | "world currency trading"

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Trade Interbank FX


The interbank forex market is responsible for a majority of daily currency trades which total about $4 trillion dollars globally. Because of the size of the interbank forex market it has a major impact on global currency exchange rates. Interbank forex dealers have access to better spreads than the average investor because of the size, or ‘line’ of the transactions. The global forex market has no central exchange and regulation is relatively light. Despite the light regulation the interbank forex market is orderly and efficient. Small investors who want to trade interbank fx now have access through the use of forex brokers who are able to put together large transactions.

Many very wealthy individuals trade interbank fx hoping to profit from currency fluctuations. George Soros is one famous investor who has made billions trading currencies and has been very successful. Soros has been so successful that he has been called “the man who broke the Bank of England.” Market participants trade interbank fx for a variety of reasons. Large corporations may want to obtain favorable exchange rates for offshore transactions. Real estate investors and securities investors may also want to take advantage of favorable exchange rates. Since forex markets are almost recession proof they are becoming more popular to offset losses in stock and commodity markets. Interbank forex brokers will usually offer investors advice and timely market information and may provide advice about investment strategies. The spot market plays an important part in interbank forex markets. In spot markets currencies are traded and delivered immediately. The forward market is also important to those who trade interbank fx. Forward currency contracts are agreements to sell currencies at a price and delivery time agreed upon by both parties.

Banks will quote investors a bid and ask price based on anticipated currency exchange rate movements. Other participants in the interbank forex market include companies, forex brokers, smaller banks, hedge funds and traders. Forex brokers act as intermediaries between these investors and the interbank forex trader. Forex markets have been called by some economists a perfect example of ‘perfect competition’ where no market participant is large enough to set prices for everyone else. Since currencies are always being bought and sold forex markets are perceived as recession proof. Thanks to the internet new forex traders can learn all of the aspects of forex trading for free online and participate in this dynamic and lucrative market.

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Interbank FX Trader


Interbank FX traders are at the top tier of the global forex market. A majority of all daily transactions in forex markets are conducted by traders from ten large banks. Since about $4 trillion dollars is traded every day the amount of money involved in interbank fx transactions is astounding. Since a majority of large currency trades are conducted by interbank fx traders the influence on currency markets is profound. Other factors that influence exchange rates include political events, economic data such as employment reports, retail sales data, GDP, consumer confidence, housing data and even natural disasters. Although there is no physical exchange for global currency trading the three major centers for interbank trading are London, New York and Tokyo. London has been a center for interbank currency exchange for almost two centuries.  An interbank fx trader typically works for a large bank or financial institution. Interbank fx traders have access to the best spreads which are normally not available to small investors.

The typical interbank fx trader usually conducts transactions in excess of $1 million dollars. There are several participants in the interbank fx market and transactions take place for a variety of reasons. Corporations may want to lock in favorable currency exchange rates for large offshore transactions. Large real estate and securities investors may want favorable rates for large transactions. Wealthy individuals may want to profit from fluctuations in currency exchange rates. Famed investor George Soros has made billions trading currencies on the interbank forex market. In addition interbank fx traders conduct transactions for the bank’s own accounts. Traditionally interbank fx traders conducted business over the telephone but in the late 1980’s electronic trading was introduced making large trades possible in seconds. Generally an interbank fx trader will call clients with current information and advice on how to profit from that information and may offer tailored advice on trading strategies.

The interbank fx market was created in the early 1970’s when nations abandoned the Bretton Woods System which set fixed rates for currencies. Currencies were allowed to float freely making forex trading for profit possible. Despite market manipulation by central banks many economists have cited forex markets as closest to the ideal of perfect competition which means in theory that no market participant is large enough to set currency prices. Forex trading has become very popular with smaller investors in recent years. Because forex markets offer investors the opportunity to profit during troubled times many investors trade forex to offset losses in other markets.

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Interbank FX Reviews


The forex, or FX, market is dominated by the interbank forex market. The world’s ten largest banks are responsible for about 53% of all daily currency transactions. Since about $4 trillion dollars is traded daily the amounts handled by the largest banks is astounding and exceeds the total national debt of most nations. The interbank market is the top tier and level of access for currency traders. The interbank forex market has no central exchange and is open for business twenty four hours a day and is closed on weekends. In the past most interbank transactions were done by telephone but the advent of electronic trading allows currency transactions to be made in a matter of seconds. The use of electronic trading has led directly to trading forex on the internet and has allowed small investors to access forex markets.

Interbank forex dealers usually work for a large bank and trade for the bank’s account and for bank clients. Usually interbank dealers trade amounts of more than $1 million dollars. The average investor usually participates in the interbank market through a broker who handles funds for a large group of investors. The large amount of money given to the broker gives him access to the interbank market and the favorable spreads available in the interbank market. For small investors there are a huge number of interbank FX reviews available online. These sites give the average investor the ability to research the positives and negatives of the brokers reviewed. Most interbank FX reviews will detail customer service experiences, reliability, investment track records and will rate the overall services offered by interbank brokers.

Trading platforms play an important part in currency markets. Most brokers offer investors their own software trading platforms. Generally interbank FX reviews will rate the various trading platforms offered by interbank brokers. Brokers will usually provide clients with a wide variety of investment options.  Most interbank forex dealers will offer investors standard currency lots and may also provide mini accounts for beginners and small investors.  Forex trading can be very rewarding and selecting the right broker is essential. Most interbank FX reviews will rate the training and educational services provided by brokers. Most of the time these are free but some brokers offer intensive mentoring programs for a fee. There are a lot of investment opportunities available in currency markets that cannot be found in traditional stock and commodity markets. Reading interbank FX reviews will help investors make sure they select the right broker.

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Interbank Forex Trading


The forex market is the largest in the world and about $4 trillion dollars is traded daily. The forex market is dominated by large banks that have a profound effect on currency exchange rates. The interbank forex market accounts for a large majority of daily currency transactions.  Ten major banks account for most interbank forex transactions including Deutsche Bank, Barclay’s, UBS AG, Citibank, JP Morgan, Royal Bank of Scotland, HSBC, Credit Suisse, Morgan Stanley and Goldman Sachs. The interbank market is the top tier of currency markets and pricing available to the largest banks are usually not available to smaller investors. The level of access in currency markets is determined by the size of the transaction or ‘line.’ The very top tier of the interbank forex market accounts for 53% of all daily currency transactions. Most interbank trading desks are proprietary and outsiders do not have access to the information available to interbank forex traders.

Interbank forex trading determines pricing in all levels of currency markets. Spreads available to interbank traders are sharp and unavailable to outsiders. Interbank traders who can guarantee a large number of transactions for large amounts can demand a smaller spread between the bid and ask price. Unfortunately these same spreads are not available to the average investor making relatively small transactions.  Traditionally interbank forex trading was conducted by telephone but the advent of electronic trading in the 1980’s led directly to internet forex trading. Since electronic transactions are fast they allow retail forex brokers and small investors to spot pricing trends set by interbank traders. Most electronic interbank forex trading is done using professional dealing networks such as Electronic Broking Services or EBS Spot Dealing system and the Reuters Dealing 3000 Spot Matching system.

Interbank forex trading involves a variety of participants who trade currencies for a variety of reasons. Some investors may want to facilitate foreign real estate or security transactions and can get the best rates in the interbank market. Corporations may want to ensure favorable exchange rates for offshore transactions. High net worth individuals may want to engage in speculative transactions and can get the best rates from interbank forex traders. Although the interbank market may be the top tier and may seem unapproachable to most investors retail forex brokers gain a lot of valuable information from closely observing trends in interbank markets and will then pass along their interpretations to clients resulting in successful trades.

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Interbank FX Trading


The interbank forex market dominates global currency markets and accounts for a majority of the daily volume of $4 trillion dollars. Most of the total daily volume is done by about ten major banks. Some of the largest market participants include, Deutsche Bank (NYSE:DB), UBS (NYSE:UBS), Citigroup (NYSE:C) and HSBC (NYSE:HBC). Each individual bank is different but most banks have a separate foreign exchange trading department. The foreign exchange department trades on behalf of the bank’s own accounts and for large clients and investors. The interbank market accounts for most turnover and speculative trading.  Central banks are also major players in the interbank fx market. Central banks control the money supply, interest rates and inflation. Central banks can use their reserves to stabilize markets. London is the chief interbank fx trading center and usually a currency’s quoted price is the London market price.

There are three main centers for interbank fx trading, London, New York and Tokyo. Most interbank trading takes place on one of these financial centers. Since currency markets have no central exchange there is little cross border regulation and the interbank fx market is self regulating. In the United Stated foreign currency options are regulated and are traded on the Philadelphia Stock Exchange. Banks may deal with each other directly or may trade electronically. There are two main constituents that make up the interbank fx market; the spot market and the forward market. The spot market is where currencies are traded and delivered immediately. In the forward market contracts are made for future delivery of currencies at a specific date and time.

Since there is no actual central exchange for the interbank fx market currency exchange rates are set my market makers. An interbank market maker will quote a bid and ask price based on anticipated changes in currency exchange rates. Since interbank transactions are so large currency exchange rates are profoundly affected by market makers. In the interbank fx markets spreads, which are the difference between the bid and ask prices, are sharp and not available to the average investor. The forex market is divided into several levels of access and at the top is the interbank fx market. Usually levels of access are determined by the size of the transaction or ‘line.’ Although the interbank market is the top tier an increasingly important part is being played by individual investors who are taking advantage of the numerous opportunities offered by forex markets.

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Greek Aid Essential for Euro Zone Stability


Greece May Need Larger Aid Package

The euro fell near a one year low against the dollar on concerns that Greece may need a larger aid package and that Greece’s debt crisis could spread to other EU nations. Some currency experts expect the euro to fall below $1.30The euro pared gains after ECB President Jean Claude Trichet told reporters that the stability of the “euro zone is impacted” by the debt crisis “underscoring the need for action.” The euro traded at $1.3191 vs. the US dollar in New York and traded at 123.97 vs. the yen. Sebastien Galy of BNP Paribas SA stated, “There’s a tremendous amount of uncertainty at the moment. The euro should break below $1.30.” International Monetary Fund Managing Director Dominique Strauss-Kahn told German MP’s that Greece may need 120 billion Euros ($158 billion USD)in aid, much more than originally thought. European Union President Herman Van Rompuy said that he is confident that Greece will receive aid in time to service its debt.  Rompuy said that negotiations between the EU, IMF and the ECB are ‘on track’ and repeated plans to call for an EU summit May 10th. Rompuy stated, “I would like to recall the strong commitment of the Euro area member states at the highest level to take the necessary steps to ensure financial stability of the Euro area as a whole.”

Government Responsibility

European Central Bank Executive Board member Juergen Stark said that EU governments need to ensure that financial troubles do not turn into a sovereign debt crisis similar to the one in Greece. In a speech in Berlin Stark warned, “The current trend in fiscal policies is simply not sustainable. … The onus is now on governments to ensure that the crisis that initially affected the financial sector, and subsequently the real economy, does not lead to a full-blown sovereign debt crisis. Averting it will require very ambitious and credible fiscal consolidation efforts. In fact, substantially stronger consolidation efforts than those conceived so far.”

Greece and Portugal Downgraded

On Tuesday Standard and Poor’s added to Greece’s problems and cut the nation’s rating to junk status and also downgraded Portugal’s rating by two notches to A-. Stark added that there is no comparison between the situations of Greece and Portugal. Stark stated, “I see no connection between Portugal and Greece, Greece is an individual case.” He said that the ECB’s record low rates are ‘appropriate’ and said that euro zone growth would be slower than growth in the US.

Quick Forex Tip: Interbank forex dealers have access to better spreads than the average investor because of the size of the transactions. Small investors who want to trade interbank fx now have access through the use of forex brokers who are able to put together large transactions. Additionally, many very wealthy individuals trade interbank fx hoping to profit from currency fluctuations. Whether you have a lot or a little money to invest, interbank forex trading is a great option because forex markets are almost recession proof.

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Greek Debt to GDP Figures to be Revised


Greece’s Deficit Worse Than Previously Thought

The euro fell to its lowest in almost a year after EU officials said that Greece’s deficit is much worse than previously thought. Adding to Greece’s woes was another downgrade by Moody’s. Most economists expect Greece to trigger the aid package soon. The yield for 10 year Greek bonds is now almost triple the rate for German bunds. Moody’s downgraded Greece from A2 to A3. Win Thin of Brown Brothers Harriman & Co stated, “The only surprise is that Moody’s didn’t cut more. It’s quite absurd given where we are in terms of debt numbers and the cost of borrowing. The euro’s heavy, and people are selling into rallies.” The euro fell for the sixth day and lost 0.6% vs. the US dollar trading at $1.3316. So far this year the euro has fallen 7.1% against the dollar on concerns that Greece’s debt crisis will spread to other EU nations. The EU raised its estimate for Greece’s deficit to 13.6% of GDP. Greek leaders are meeting with EU officials to discuss the aid package.

Greek Accounting Practices Questioned

Greece’s mounting deficit and questions about accounting practices and the accuracy of the nation’s economic data have undermined the EU’s budget regulations and have contributed to the euro’s slide in currency markets. Sylvain Broyer of Natixis in Frankfurt stated, “They have played against the rules and now they’re getting the bill. It’s a very uncomfortable situation for the Greek government. Greece has very much benefited from the currency region, but ignored the rules.” On Wednesday officials from Prime Minister George Papandreou’s government met with EU officials to clarify the proposed loan mechanism. In May the Athens government faces 8.5 billion euros of maturing bonds lending urgency to the ongoing talks. Today Papandreou stated, “I want to reiterate one more time that all we announced and that is included in the growth and stability pact must be implemented without even one day of deviation from the timeframe we have set for each decision.”

Moody’s Downgrades Greece–Again

The news of the Moody’s downgrade triggered a decline in Greek asset prices and increases the pressure for the Athens government to trigger the emergency loan mechanism established earlier this month. Recent austerity measures have triggered social unrest in the debt ridden socialist nation. About 10,000 students and government workers marched to parliament and demanded that the government resist pressure to implement more spending cuts. Greek and EU officials may back away from a previously announced target for Greece to cut its deficit to 8.7% of GDP this year. Financial markets have been hard hit by the revised figures. Giada Gian of Citigroup said, “What concerns me is the general uncertainty about the Greek official figures. This affects market perception about Greece …that one can’t rely on the Greek statistics and that the deficit is revised up and up and up.”

Quick Forex Tip: Interbank FX traders are at the top tier of the global forex market. A majority of all daily transactions in forex markets are conducted by traders from ten large banks. Despite market manipulation by central banks many economists have cited forex markets as closest to the ideal of perfect competition – meaning that no market participant is large enough to set currency prices. As a result, forex trading has become popular with smaller investors because forex markets offer investors the opportunity to profit during troubled times , allowing them to offset losses in other markets.

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Germany May Delay Greek Aid Package


No Fast Tracking Says Merkel’s Opposition

The main opposition party in Germany, the Social Democrats (SPD) has threatened to block the plan to fast track the Greek aid package in parliament. The move could delay the implementation of the critical aid package for debt ridden Greece. Carsten Schneider, the budget spokesman for the Social Democrats, told reporters that his party does not want to fast track any bill that could result in Germany guaranteeing billions of euros in aid. The move comes in advance of a critical election. Schneider stated, “We won’t go along with this. First the government can’t decide what they want to do and now they want to put us under pressure with the legislative process.”

German Politicians Wary in Advance of Election

The Social Democrats support aid for Greece but are reluctant to let conservative Chancellor Angela Merkel delay parliamentary discussion on the issue until after a key regional election in North Rhine-Westphalia. Public opinion polls show that most Germans are opposed to a Greek bailout and Chancellor Merkel has been reluctant to promise any aid in advance of the upcoming election. Merkel is fearful that any promise to aid Greece could hurt her party in the elections. The Social Democrats hope to force Merkel to accept a debate on the issue sooner than she would like. A spokesman for Merkel’s conservative party said that should Greece request aid in the coming weeks that the earliest that the cabinet could approve a bill would be May 12th and could then push the bill through both houses of parliament by May 25th.

Greek Request For Aid ‘Expected’

Investors believe that Greece will request aid in the near future but are wary that Germany could delay the aid process for political reason. A spokesman for Merkel’s party said that since Greece does not need the aid package all at once the IMF could provide the initial funds with France and Germany providing further assistance in steps.  Germany is expected to provide 8 billion euros of the 30 billion aid package and France has promised 6.3 billion euros. Although Merkel’s party has a majority in Bundestag lower house any attempt to fast track legislation requires the approval of opposition parties. Opposition to the accelerated approval process is not limited to the center left Social Democrats. The conservative Christian Social Union of Bavaria has also voiced opposition to the accelerated approval process. On Wednesday German Finance Minister Wolfgang Schaeuble told parliamentary committee that the German government expected Greece to formally request aid. An unnamed member of parliament quoted Schaeuble as saying, “We have to expect it”.

Quick Forex Tip: The average investor usually participates in the interbank market through a broker who handles funds for a large group of investors. The large amount of money given to the broker gives him access to the favorable spreads available in the interbank market. For small investors there are a huge number of interbank FX reviews available online. These reviews give the average investor the ability to research the positives and negatives of the brokers reviewed. Most interbank FX reviews will detail customer service experiences, reliability and investment track records.

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IMF Warns Public Debt Could Prolong Credit Crisis


Sovereign Risks Could Undermine Stability Warns IMF

The International Monetary Fund said that the health of the global financial system has improved but that recovery in the global economy is still fragile. The IMF also said that investor concerns over public debt could undermine recent gains in stability. The IMF also said that Greece is a special case and should not be compared with other Euro Zone nations. In it’s Global Financial Stability Report the IMF said, “Advanced country sovereign risks could undermine stability gains and take the credit crisis into a new phase.” The IMF said there is a possibility that deteriorating sovereign credit could infect domestic banking systems and affect the real economy creating another credit crisis.

Accumulation of Public Debt ‘Significant’

The IMF is concerned that investor demand for high rates will drive up borrowing costs for the private and public sectors. The director of the IMF’s monetary and capital markets department pointed out that a new crisis is not imminent. Director Jose Vinals stated, “We’re saying that as a result of the crisis, the accumulation of public debt has been significant and there is concern now in the market with sovereign risk.” Vinals dismissed concerns that Greece’s debt crisis could spread to other euro zone nations such as Spain and Portugal. Vinals further stated, “Greece is a special case and we can’t say other countries are in that situation. These other countries have solid fiscal institutions and don’t have the fiscal uncertainties that Greece had. Greece is a wakeup call, basically saying that in some extreme cases, such as Greece, this could lead to serious problems.”

Some Banking Sectors Poorly Capitalized

The IMF reduced its estimates of global bank write downs from $2.8 trillion to $2.3 trillion reflecting improvement in the global economy. Previous estimates a year ago had been as high as $4 trillion. The $4 trillion figure included insurance company losses and was made when stocks and other assets were flat. Asset prices have risen since then enabling banks to recoup earlier losses. In the US estimates for loan write downs for 2007-2010 were reduced to $588 billion. The IMF warned that mortgage delinquencies and foreclosures will rise as unemployment continues.  Euro Zone bank write downs were reduced to $443 billion due to improvements in growth and employment. The IMF warned that although most banks are now adequately capitalized, some banking sectors remain poorly capitalized because of commercial real estate losses. The IMF report said that banks face more stringent regulations that may require them to raise more capital to make balance sheets less subject to risk.

Quick Forex Tip: Interbank forex trading determines pricing in all levels of currency markets. Spreads available to interbank traders are sharp and unavailable to outsiders. Interbank traders who can guarantee a large number of transactions for large amounts can demand a smaller spread between the bid and ask price. Unfortunately these same spreads are not available to the average investor making relatively small transactions. Thus, for the average investor to participate in interbank forex trading, s/he must do so through the use of a broker.

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