The official foreign currencies exchange in Latinamerica
August 21, 2008
The official foreign currencies exchange is established according to the priorities of the economic model of the country.The value adopted by the official foreign currencies exchange will be a key indicator to know in which direction the wind blows.
In Argentine, for example, during the 90’s and until 2002 the official foreign currencies exchange rate was fixed to one peso, one dollar. That means that for each peso issued by the monetary authority (Central Bank) there should be a dollar in the Public Treasury that supported it.
After 2002 the official foreign currencies exchange rate changed, after convertibility the peso was devalued and actually the official foreign currencies exchange rate moves between $3.20 per dollar.
In other Latinamerican countries the dollar value is not as high and the official foreign currencies exchange rate, for example, in Brazil is 1.83 reales per dollar.
In Venezuela, for example, official foreign currencies exchange rate is about 2250 bolivares per dollar, but the feature that this country has is that there is an spot market in which the official foreign currencies exchange rate quotes at 5500 bolivares.
In Latinamerican countries the official foreign currencies exchange is tied to the dollar standard as reference currency with which it can be calculated the value of commercial goods.
Although many economists confirm that the currency exchange is regulated by the simple game of the supply and the demand, the reality indicates that the macro-economic factors play a determining role in the price and exchange of currency. These are some of the reasons for which the movements in the price of foreign currency exchange take place and that is soon reflected in the behavior adopted by the investors in the currency exchange. That is why if you knew to process all the provided information the currency market would be a whole procedure…
Open positions in Forex
August 15, 2008
How to interpret pairs in forex? In the currency market currencies are the main protagonists and are expressed in pairs. This is not accidental and is because forex currencies are bought and sold on another, because in the couple currencies are a team that complement one another.
This type of buying and selling currencies in forex is due to the performance of economies generally fluctuates, and movements in the currency market are complementary when there is the fall of a currency with the rise of the other.
The forex currency pair is comprised of a base currency and quoted currency, if you believe that a certain couple will raise then you must buy this couple because we believe that the currency will raise with respect to the currency quoted which devalue.
To operate in forex position you must open a “Long” (long position), for the purchase, or else if you want to sell it to open a “Short” (short position). What means opening position “Long” and “Short”?. If you buy a pair, what we are doing is buying cheap because we believe that the value of the currency will raise so we´ll sell it when its value exceeds the purchase. So the investor believes that the base currency is going to be valued regard to the currency quoted. This is an open position “Long.”
If we make the opposite transaction it will be doing in forex will open a position “Short”. What makes the investor is to buy high because it believes that the currency will fall and close the position where it has a lower value when it´s sold. In this way the investor thinks the base currency to depreciate versus the currency quoted.
To carry out such operations in forex will have to have a broad knowledge of market conditions and recent movements in exchange rates otherwise any decision can be a bad one.
The currency trading has become a fast and efficient way to improve our yield, this has much to do with the present conditions that the market lives and the economy in general. The climate of volatileness and fluctuation that there is at the moment remarkably favors the currency trading, since the movements in the prices are constant and the investor can and must take advantage of that possibility to win with the currency trading.
The Statistics and it’s role in foreign currencies evolution
August 14, 2008
Over the last few months the media predicted the collapse of the dollar as something irremediable and there was no turning back, but as we know financial markets times tend to be shorter than in most other activities carried out by the man, and above all more volatile .
Evolving of currencies is a constant in forex market, the quotation of currencies vary from one moment to another and cycles in the price increase are very short, for this reason we must be alert to what is happening in the market for being able to take full advantage.
One of the main news that was met in recent weeks was the evolution of the dollar currency, the north american currency scaled 0.3% per euro. The evolution of the north american currency closed rising against 12 of its 16 most operated counterparts.
Evolving of the currency occurred after having known the details of the trade deficit of the United States which was the lowest in two years. It will be recalled that one of the factors who had influenced the dollar fall was high trade deficit proceeds of business dealings that the country maintains with northern china.
As can be seen market encourage can change from one moment to another, and the evolution of currency, in this case the dollar may shoot up, when a few months ago the economic gurus predicted that this situation was not going to happened.
VIA | www.ForexMarketReview.com
