Exchange Money Australia
The Foreign Money Exchange market is a decentralized, 24/7 worldwide trading system. Known in many circles as ‘Forex’, in recent years it has become a popular way for individuals to invest. In most foreign money exchange transactions, one party buys a certain amount of one countries currency, using the currency of another country. The idea is to select a currency that will, in time, rise in comparison to that of other nations. Investing the right proportion of AUD in the right nations, for many, brings a massive financial windfall.
Traders and Currencies
The biggest currency traders, surprisingly, are the German Deutshe Bank, the Swiss UBS AG, the British Barclays Capital, and the American Citi Group. These groups have a combined market share of more than 50%. Traditionally, the main currencies traded are the Euro (EUR), and the Swiss frac (CHF), with the US Dollar (USD) and Australian dollar (AUD) also being popular choices.
Speculation and Speculators
The majority (about 80%) of foreign money exchanges are speculative. This means that the trade is made specifically in hopes that the currency they are buying will increase in value. This has, traditionally, been the purview of hedge funds, which have been speculating into foreign currencies en mass since the mid 90s. Hedge funds have a considerable advantage in currency trading, as they are able to borrow and buy billions of dollars wherever they see fit, in many cases even causing the change in currency they desire on their own. Banks have long been major forex traders, providing most of the market for non speculative trading. In recent years their participation in the system has declined as the popularity of electronic trading systems rises, and people no longer need to pay banks to conduct their trades for them. Remittance companies, rather than practicing speculation, make echanges for a fee. In particular, their customers are migrant workers sending money back to their home country. Predictably, the biggest remittance company is Western Union.
Trend Measurement
the international currency exchange rates have no official value, and there is not much international regulation. Multiple marketplaces determine the official value of currency, making for a number of exchange rate for different banks and markets. There is not, however, much difference in prices; if there was, it would instantly be exploited by entities looking to make some instant, free money. The dominant force in price determination is London, and the quoted price of currency is usually in line with the London exchange. For example, if someone wanted to buy a quantity of AUD, the rate would depend on which trader they chose, but if they were to look up the rate or see it on the news, that rate would be that determined by London.
Manipulation
National banks, while not directly trying to profit from forex trading, have a massive influence on it, manipulating the money supply and interest rates in a bid to set their currency at a favorable rate and garner an economic advantage for their country. For this they use their reserves, although these have limits, and with those limits come the limits on their control of the market. Private entities such as hedge funds are able to exercise a comparable level of control. There is significant controversy surrounding currency manipulation; China, for example, has recently come under fire for purposefully keeping the value of their currency lower than it should be in order to be more competitive in the international export market.
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