FOREX FX
Foreign exchange market

Serious Information

Trivia

The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market, which means it dwarves the stock market of any nation, even the USA for example.

The foreign exchange (forex, FX) market exists wherever one currency is traded. It is by far the largest market in the world, in terms of cash value, and includes trading between banks, central banks, currency speculators, multinational corporations, governments, and financial markets and institutions. Retail traders are a small part of this market. They may only participate indirectly through brokers or banks and are often targeted by forex scams.

In finance, the exchange rate also known as the foreign exchange rate, forex rate or FX rate between two currencies specifies how much one currency is worth in terms of another. For example an exchange rate of 120 Japanese yen to the US dollar means JPY 120 is worth the same as USD 1. The foreign exchange market is one of the largest markets in the world. By some estimates, US$ 2 trillion worth of currency changes hands every day. The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate quoted and traded today but for delivery and payment on a specific future date.

The foreign exchange market is unique because of: its trading volume, the extreme liquidity of the market, the large number of, and variety of, traders in the market, its geographical dispersion, its long trading hours - 24 hours a day (except on weekends). the variety of factors that affect exchange rates, average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study Triennial Central Bank Survey 2004.

The large international banks continually provide the market with both bid (buy) and ask (sell) prices. Minimum trading size for most deals is usually $1,000,000.

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100 / 1.2300 for transfers, or say 1.2000 / 1.2400 for banknotes or travelers' cheques.

There is no single unified foreign exchange market. Due to the over - the - counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded.

Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, many economists (e.g. Milton Friedman) argue speculators perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do. Other economists e.g. Joseph Stiglitz however, may consider this argument to be based more on politics and a free market philosophy than economics.

Currency speculation is considered a highly suspect activity in many nations. While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not, according to such a view. Thye claim it is simply gambling, often interfering with economic policy. In 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 150% per annum, and later to devalue the krona. Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.

The UK was thrown of the in 1992 ERM due to currency speculation damaging the value of the £. The British Conservative government spent £ billions trying to prop up the value of the currency. Yet even billions are small fry compared to the amount of money currency speculation can trade. No nation can at present defeat the speculation.

Gregory Millman reports on an opposing view, comparing speculators to "vigilantes" who simply help "enforce" international agreements and anticipate effects of basic economic "laws" in order to profit.

In this view, countries may develop unsustainable financial bubbles or otherwise mishandle their national economies, and forex speculators only made the inevitable collapse happen sooner. A relatively quick collapse might even be preferable to continued economic mishandling. Mahathir Mohamad and other critics of speculation are viewed as trying to deflect blame from themselves for having caused unsustainable economic conditions.

The Forex industry is primed for future China reforms

HISTORY OF FOREX
Early Days
Until World War One, currency markets were relatively stable. While different currencies and the need to exchange them had existed since the Babylonians (who are credited with the first use of paper notes and receipts), exchange rates were relatively stable. Speculation hardly ever happened, and certainly the enormous speculative activity in the market today would have been frowned upon. Most banking and government institutions, as well as the general public, regarded as speculating in currency as a negative thing — and preferred exchange rate stability.

After World War 1, foreign exchange markets became volatile and saw exponential leapage in the amount of speculative activity. Official and public sentiment frowned on this, but before any official changes were implemented the world crashed into the Great Depression. As a result, foreign exchange activity dwindled. The forex markets were quiet through World War 2.

The Bretton Woods system of international monetary management established rules for commercial and financial relations among the world's major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nations.

Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire for the UN Monetary and Financial Conference.

The Bretton Woods Accord was superseded by the Smithsonian Agreement in 1971. Although similar to Bretton Woods, the Smithsonian agreement allowed for a broader fluctuation band in currency rates. In 1972, Europe tried to break away from its linkage to the USA dollar. when the market started to go through a series of important changes.

1978 The European Monetary System is created in renewed bid to gain independence for European currencies from the U.S. dollar.
1979 Associated Foreign Exchange, Inc. is incorporated with the mission of helping businesses, organizations and individuals who need to transact business in an increasingly complicated forex market.
1993 European Monetary System fails, signaling the final evolution to a worldwide free Float foreign exchange system.
1999 European legacy currencies (French franc, German mark, etc.) cease trading as euro becomes the single Eurozone currency.

The most famous FOREX trader

George Soros born August 12, 1930 in Budapest, Hungary as György Schwartz is a financial speculator, stock investor, philanthropist, liberal political activist and philosopher. Currently, he is the chairman of Soros Fund Management and the Open Society Institute and is also a former member of the Board of Directors of the Council on Foreign Relations. His support for the Solidarity labor movement in Poland, as well as the Czechoslovakian human rights organization Charter 77, contributed to end the Soviet Union's domination on those nations. His funding and organization of Georgia's Rose Revolution was considered crucial to its success by Russian and Western observers although Soros said his role has been "exaggerated." In the USA he is known for donating money to efforts to defeat President George W. Bush's bid for election. With Warren Buffet he is considered one of the greatest finance traders of the 20th century. Warren Buffet goes for long term share trading rather than short term speculation. Soros has often made mistakes though in speculation, despite the fourtune he has made.

http://georgesoros.com/

Trivia

An Australian bear named 4X can be confused with the trading system.

THE Zimbabwe Under 21 women’s hockey team’s participation in this the 2004 World Cup Championships, in September in Chile, was in limbo as the country’s hockey association tried frantically to source the elusive foreign currency needed to fulfill the fixture. The team needed US$80 000 for its upkeep in Chile. The Sports and Recreation Commission (SRC) reneged on its promise to make available Z$50 million and this forced one of the girls to e-mail Oprah Winfrey asking for assistance.

In 2004 the Indian Hockey Federation (IHF) has finally announced a six-member selection committee with four ex olympians.

In some nations foreign currency is used in day to day life as it is more stable then the native currency,

Rogue Trader (1999) was a movie starring Ewan MacGregor, made about trading, involving the collapse of a bank in Britain.

Markt für Devisengeschäfte = Germany

Links on websites on subject

http://www.nasdaq.com/ The homepage of the stock exchange

http://www.cityequities.com/
http://www.moneyweek.com

government_bond information

Other Lonympics sites