Main players of forex
Majors and agencies influencing forex
Ever wondered why US dollars are always occupying the hot seat of base currency. However, there are exceptions for the mention analyses, these constitute of primarily four other major currencies apart from US dollars that act as driving force for the trades operated in forex. Forex has five major currencies against which other currency are generally speculated, these are,
1) US dollars symbolized as USD.
2) EURO symbolized as EURO.
3) Japanese Yen symbolized as JPY.
4) Pound sterling symbolized as GBP.
5) Swiss Frank symbolized as CHF.
These five currencies together syndicate as majors on forex and the other currencies traded against them or for them are called crosses.
Among them US dollar occupies the prime position as more than 80% of the forex trade in the market are speculated against it. New York stock exchange has been trading around 50billion US dollar per day in the forex market and no wonder dollar has become the most sought after currency on the global forex markets.
Hypothetically it can be assumed that the bases for their major role are derived from their financial organization or the inventions and discoveries which have catered to their economic progress. We are all aware of the famous Swiss bank and its might. It is rumored and believed that bank of England holds much of the known gold as its reserves and can influence the stock and forex markets in a wink of an eye. Japanese technology and electronic tycoons have already over taken the world by storm. Ever since the conjunction of European union, the combined currency EURO has emerged as a formidable adversary for other currencies in the forex arena to recon with. Eventually the mighty United Sates of America which is indeed the most powerful nation of the globe and its political head the president, the most influential person known in the present era, US is not only mighty on the military front, but they have evolved as a nation which has capitalized every giant business ventures and opportunities present on our planet.
However, there are still other agencies present which can influence the exchange rate of the majors present in the forex markets. Following is the list of some of these agencies which can prove to be a driving force behind the scenes for a particular currency and can be held directly or indirectly of its upsurge or its upheavals.
1) Central banks and governments: - forex is a huge markets necessitating tremendous amount of money in fact, the foreign exchange market derives its force with the liquid capital. Central banks and government of a country can play an extremely significant role for influencing a particular currency and there by improving their economy. For instance, India can gain tremendous advantage with its foreign exchange reserves of millions of dollars. By having the foreign exchange reserve of a currency even a developing country like India can be a proud faction of the US economy and can have a rampant advantage derived indirectly via the growth of US economy.
2) Banks: - banks are playing a crucial role on the global front by investing millions or billions of dollars into the forex markets to gain monetary increments for their share holders. In other cases their clients may employ banks as brokers for investing huge amount of capital in the forex markets.
3) Funds:- visualizing the upheaval of stock markets all around the globe, many funds have turned their heads towards forex and since time is not a boundation and leverage is also enormous, which can range from 100:1 to 50:1 maximum, not found in the primary stock markets. These funds are investing huge multitudes of capital in the forex markets to gain tremendously out of extreme volatility of the forex market.
4) Corporate:- mammoth business corporate organizations who are done with the primary markets are now moving towards a much volatile forex markets which offers more opportunities for deriving monetary profits.
5) Travel and outsourcing:- another factor which has recently evolved as a guiding hot spot for a a currency exchange rate and determining the literal value for it is the industry of travel and tourism with contemporary modern, technological advancements in the field of transportation there are millions of tourist and business man traveling from one part to the other. The most frequently visited country will achieve an elevated leverage for its currency as it will be frequently exchanged for other currencies. The global competition has given rise to the modest operands of outsourcing. Thousands and millions of US dollars are paid to employees working in the developing nations for MNC’s based in developed countries, these dollars are finally exchanged for the currencies of the developing nations, this has proved as one global trade which has in variable influence over the currencies in pairs meant for exchange.