Exchange Archives - GUJRAT INDIA

Understanding The Foreign Exchange Market

With the world increasingly becoming a global village, more and more people are travelling and doing business in different parts of the world. Under such circumstances, it is crucial that you have a local currency of the country you are visiting to aid in your travel. Traditionally, travelers have been buying and selling currencies to aid in their travel and business through banks. These banks set particular rates and sell currencies to those in need. However, during the late 1970s, this trend changed and traders began adopting what is now referred to as the foreign exchange market.

The foreign exchange market is also referred to as the currency or forex market. In simple terms, this is where currencies are traded. This is the largest market in the world with a turn over of 1.3 trillion dollars per day. What began as inter-bank exchange has now grown to the point where there is a floating exchange rate which is determined the demand and supply of a particular currency. Today, anyone with knowledge of how the financial markets work can take part in foreign exchange trading.

The foreign exchange market is entirely dependent on supply and demand making it a highly volatile market. In addition, despite the fact that only a few major currencies are traded in the forex marketplace, the trading volume is extremely high. This is because every country is part of this market and has financial institutions and individual traders who trade in foreign exchange thus creating a high volume of currency for trade.

Today, you can trade in foreign exchange over the Internet from any location in the world. All you have to do is open your online forex account with the broker of your choice, deposit funds and start trading. The foreign exchange marketplace is open 24×7 making it possible to traders across the world. However, expert traders know that there are certain hours of the day when the market is at its peak. During these hours, there is a lot of volatility and certainly a lot of movements. These are known as the Power Hours and they usually coincide with the closing of the European trading sessions and the start of the US session. Also, the forex market has its cold zone where there is not much movement. This usually occurs when both the US and European sessions are closed while the Asian session is open.

The amount of profit that you can make in the foreign exchange market can be enormous if you make appropriate use of leverage. However, you should exercise caution not to overindulge in leverage without adequate training as this can quickly lead to your downfall.

Learn Foreign Exchange Hype and Make Lots of Money Fast

Earning money entails making the right choices and being determined to do what it takes to put cash into your bank account. That is why engaging yourself in the trade world is a good option if you want to earn really big.

The trade world is a lucrative and exciting business wherein you can earn a lot of money and at the same time learn a lot of the tricks of the trade which is an asset for your future plans and goals.

In engaging in the trade business, you should be very careful and discerning with which option of the most common forms of trading available you should have. These three common forms of trading are: Shares/Equities/Stocks; Options and Foreign Exchange or Forex.

Now you might be probably all dazed on all of these business jargons that were mentioned earlier. Read along and let me show you what is in store for you in this world called the Trade.

Let us start with defining what a Share, Equity and Stock are. In reality, these three actually refer to the same thing. As their name suggests, when you purchase a share, you own a piece, a portion of that company. You then become an investor in that company.

When you are already an investor, you are now entitled to a share of the company’s profits. These shares are called dividends. It is almost the same with having money in the bank, you also get paid with interest for investing your money.

Shares on the other hand are traded on exchanges. To be able to trade shares, you must need to use a stock broker to be able to purchase them for you, a stock broker may normally charge a fee for the transaction which depends on the number of people who are trading actively.

In trading shares, it is best for you to only trade to win when the price is increasing or going along. The downside of trading is that it is more complicated to make money when the price is decreasing.

The other form of trading, the Trading Option is, in reality more complicated than trading shares by themselves. The big difference between share and options is wherein stocks actually give you the ownership and rights on a small piece of the company, options are just contracts that provide you with the right to buy or sell the stock at a specific price by a specific date. You should keep in mind that in every option transaction, two persons are always involved- a buyer and a seller.

One of the best benefits of trading options is the leverage that it provides. With trading options, you can get bigger exposure by just utilizing only a small amount of your trading capital.

The final form of trading, the Foreign Exchange or Forex is actually the best form of trading among the three. With Forex, the risks are very minimal, the work is just easy and it is very rewarding.

The Foreign Exchange Market has transactions 24 hours a day, 5 and 1/s days a week and daily exchanges are actually worth approximately two trillion dollars. Forex is also made up of about 500 trading institutions such as international banks, central government banks and commercial companies and brokers for all types of foreign currency exchange. It is very obvious that trading institutions behind Forex are very credible and this may assure you that you would not be cheated on.

In getting started with the trade world, you should be able to learn all of the tricks of the trade because not everyone inside this world would be willing to help you. Instead, you should help yourself by being determined and willing to learn the correct strategies which you are going to apply when your trading days come.

Marine Insurance – Exchange Rates Insurance News

Large amounts of international trade and many limits and sums insured for Marine insurance contracts are negotiated in a currency other than Australian Dollars (A$).

Fluctuating rates of exchange between currencies are common with most entities exposed to this area implementing forms of hedging or risk management to reduce the likely impact on their business.

Where rapid and significant variances occur together, the best laid hedging and risk management plans may not be sufficient to completely eliminate impact on a business.

This bulletin highlights some of the exchange rate issues which may impact Marine insurance covers.

Currency and Trade

The currency of the United States of America (US$) is recognised as the international currency of trade, shipping and to a lesser extent,aviation. Some other currencies, notably the Euro have a showing in trade contracts however, the US$ is predominant.

Sale and purchase agreements will often impose the trade currency of choice as US$ which eventually leads most non-USA domiciled traders, sellers or buyers into a foreign currency transaction and exposure to exchange rate fluctuation.

Business plans, projects and actual transactions which establish profit or transaction margins on an expected exchange rate level can be eroded or extinguished where rapid exchange rate fluctuation occurs.

Likely Marine Impact

(where exposed to foreign currency or overseas supply)

Hulls – revaluations may be desirable as machinery/parts cost increase.

Cargo – Limits of liability may need review and a watch put on turnover and sendings to ensure a blowout in figures does not give the insured a surprise at time of adjustment.

Liability Limits – may need review.

Claims Impact

Claims requiring payment in foreign currency will need conversion from A$ with resultant monitory impact to the claims record of the insured. The replacement of components and parts sourced from overseas may attract inflationary influences due to exchange rate fluctuation.

Insurer Capacity

Insurer per risk capacities will often be established on an annual basis following renewal of treaty reinsurance. Rapid and significant variations in exchange rates can lead to short term capacity constraints on risks with large limits or sums insured in foreign currency.

Where rapid and significant exchange rate variations occur, care should be taken to accurately assess and react to any adverse impact on insurance coverage.

Disclaimer: This bulletin is for information purposes only and is not legal advice.