18/08/ · For example, a central bank may weaken its own currency by creating additional supply during periods of long deflationary trends, which is then used to purchase foreign currency In addition to the inherent risk linked to trading, with Forex trading you need to add margin trading and leverage, which means that you can trade large amounts with little initial capital. So, this high level of risk means that you need to be sure that you do not use money that you need to live on – it sounds an odd thing to say, but make sure you always trade with money you can afford to lose!Estimated Reading Time: 8 mins Step 1: Choose the currency pair you wish to trade. The four major currency pairs In forex trading, which are the most popular are as follows: EUR/USD: The Euro vs the U.S. dollar. USD/JPY: The U.S. dollar vs the Japanese yen. GBP/USD: The British pound sterling vs the U.S. dollar. USD/CHF: The U.S. dollar vs the Swiss franc
10 Reasons Why You Should (and Shouldn't) Forex - My Trading Skills
Well, you are not alone in thinking this. Looking at the insane exchange rates banks impose on money exchange or money transfer abroad, most people think why not abolish different currencies and simply stick to one world currency.
Buckle up future Raghuram Rajan, this is why! When you are exchanging one currency for another, currency exchange fees are always involved. Banks charge this fee for performing the service of exchanging the currency in your hand to another foreign currency you need. This fee is also charged when you want to send foreign currency to your friend or close relative staying abroad.
A one world currency will solve this problem. Travel anywhere in the world and you will be able to use the same currency and thus no need to pay exchange fees. When we consider money exchange on the scale of countries doing it, this point becomes very obvious. The example of Europe is fitting here. The European Commission estimates that after the euro was adopted as a single currency across the EU, around 13 to 20 billion euros were saved every year by nations not needing to pay exchange fees to conduct trade between them.
This brings us to our next point…, why we dont own pysical currency when trading forex. Different currencies for different countries and their varying exchange rates are an obstacle to the free flow of trade.
When a single world currency is implemented it will boost the volume of trade and transactions between countries. There will be price transparency of importing and exporting goods. Establishing a one world currency would mean forming a central bank that has the sole authority to print currencies and set interest rates.
Now you can agree that the economic conditions prevailing in each country are different and unique. A central bank must act fair and hence cannot formulate economic policies favouring one region over another. It must formulate a uniform economic policy across the world with the same interest rates everywhere no matter what the economic condition of individual countries is.
However, this is not practical when considering all countries at the global level. A single world currency would mean governments would have to give up their autonomy over drafting economic policies benefiting them. This may not turn out so well. Consider the example of China. China is a country whose economic value of exports is greater than its imports. Thus it devalues its currency making its exports attractive abroad.
Why are exports attractive after devaluation? How does China devalue its currency? By increasing its money supply in the economy. When there is more money flowing into the economy, the value of each individual paper currency decreases leading to its devaluation. China can use two methods of increasing money supply. By printing more currency or by decreasing interest rates. When interest rates are decreased, more people borrow money from banks to spend and there is more overall currency flow in the economy.
Thus China can control its policies to maintain its economy. However, if there is a single world currency, then China would not be able to implement these economic policies and in the extreme case, their economy may even collapse! A one world currency may solve the problem of forex trading and currency speculation but it might inadvertently create more problems of its own! We previously talked about the central bank of a one world currency having to act in a fair and unbiased manner.
However, even when the central bank tries to act fair, a uniform policy will benefit some countries and may prove disastrous for some others! As an example, you need not look any further than Germany in European Union. Germany is probably the country that benefited the most from the adoption of the euro.
Germany was a strong economy even before the formation of the European Union and the German Mark was among the strongest currencies in the world, why we dont own pysical currency when trading forex. With the adoption of the euro, a devalued currency compared to the Deutsche Mark, German exports became attractive to the rest of the countries in Europe and the German economy further prospered.
Other member states, especially in south-eastern Europe, could not devalue their currency to boost exports and reduce their debt. The euro being the why we dont own pysical currency when trading forex currency, they could not frame their own monetary policy and become competitive. Thus their exports dwindled and debt soared. Right now cryptocurrencies are offering a glimmer of hope. They are projecting themselves as a fast, cheap and easy mode why we dont own pysical currency when trading forex monetary transactions that have the potential to replace forex transactions.
The widespread adoption and acceptance of cryptocurrencies by many world governments remain a major problem. Until then, if you want low cost, easy and fast forex transactions, look no further that ExTravelMoneyyour perfect partner to help you find the best forex deals in your town or city! Find currency exchange and money transfer abroad at the best rates online in India and save money on forex transactions. Also Read: The Secret Behind Who Determines Exchange Rates in India.
Benefits of one world currency The benefits of a single world currency are pretty obvious to all; 1. Elimination of currency exchange fees When you are exchanging one currency for another, currency exchange fees are always involved, why we dont own pysical currency when trading forex.
Better utilisation of money Why we dont own pysical currency when trading forex we consider money exchange on the scale of countries doing it, this point becomes very obvious. This brings us to our next point… 3. Free flow of Trade Different currencies for different countries and their varying exchange rates are an obstacle to the free flow of trade. The economic conditions of each country is different Establishing a one world currency would mean forming a central bank that has the sole authority to print currencies and set interest rates.
Loss of financial autonomy of a country A single world currency would mean governments would have to give up their autonomy over drafting economic policies benefiting them. Brewing up an economic crisis A one world currency may solve the problem of forex trading and currency speculation but it might inadvertently create more problems of its own! Also Read: The Secret Behind Who Determines Exchange Rates in India Comments.
Can you REALLY make money Trading Forex??
, time: 21:00Why We Don't Use One World Currency - The Pros and Cons - ExTravelMoney
Step 1: Choose the currency pair you wish to trade. The four major currency pairs In forex trading, which are the most popular are as follows: EUR/USD: The Euro vs the U.S. dollar. USD/JPY: The U.S. dollar vs the Japanese yen. GBP/USD: The British pound sterling vs the U.S. dollar. USD/CHF: The U.S. dollar vs the Swiss franc Since the forex market is foreign exchange, each transaction must contain one currency against another. We'll work through an example, using blogger.com as our currency pair, with , being the quantity. In this example, EUR is the Transaction Currency. USD is the Settlement Currency. Buying , blogger.com would mean that you are going long or 30/11/ · Terms and conditions for physical delivery are negotiable with banks - i guess Oanda carries enough weight to get good rates. Besides, nowadays even smallish funds/corporations get access to Reuters , Bloomberg or EBS, so they could even arrange it them selfs. I dont know how exactly they are doing it - and its probably a business secret
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