Continue reading Currency Trading Soars to $4 Trillion a Day

Currency Trading Soars to $4 Trillion a Day originally appeared on BloggingStocks on Wed, 01 Sep 2010 13:20:00 EST. Please see our terms for use of feeds.

Why buy the Swiss franc? There are many reasons. Here are just a few:

• The Swiss franc is the stand-alone currency of Switzerland. By this we mean that Switzerland is not part of the European Union and does not use the euro as its currency.
• The Swiss franc offers currency exposure to Europe, while not subject to problems of countries like Greece and Spain defaulting on their sovereign debt.

Continue reading Swiss Franc at Record High Against Euro

Swiss Franc at Record High Against Euro originally appeared on BloggingStocks on Fri, 27 Aug 2010 09:30:00 EST. Please see our terms for use of feeds.

North Korea's plan to limit wealth through a currency exchange has caused nothing but problems. Early on, it led to riots (and fatalities), and later the government eased the upper limit on wealth that could be held. The situation has become so difficult that the regime has even issued an apology. North Korean premier Kim Jong-il, according to a South Korean activist group, has come out and said the country is sorry.

"During a meeting of senior members of the Pyongyang municipal people's committee a few days ago, Kim Yong-il apologized for confusion and instability in the daily lives of people caused by wrongly fixed prices at state-run shops from the time of the currency reform to early this year," said the Good Friends newsletter.

Continue reading Currency Debacle Leads to Rare North Korean Apology

Currency Debacle Leads to Rare North Korean Apology originally appeared on BloggingStocks on Wed, 10 Feb 2010 11:00:00 EST. Please see our terms for use of feeds.

The carry trade is back in vogue with hedge funds and large institutional traders.

First of all, what is the "carry trade?" It is a very simple trade. Traders buy a currency, such as the yen, in which interest rates are near zero and buy a currency in which rates are higher, and they pocket the difference.

Continue reading Why is the 'carry trade' back in vogue?

Why is the 'carry trade' back in vogue? originally appeared on BloggingStocks on Tue, 18 Aug 2009 15:40:00 EST. Please see our terms for use of feeds.

The U.S. dollar is considered a "safe haven" currency because it is the world's reserve currency. The Dollar Index contract is traded on the New York Board of Trade. It is traded as a single currency but the actual value of the dollar is based on a basket of currencies. What does this mean in actual trading? Traders usually decide to buy or sell a given currency based on the strength or weakness of the underlying economy for that currency. So when we see a headline: "Pound hits 23 year low on Dollar" it means that on a relative basis the pound is weaker than the U.S. dollar.

You could infer from this headline that the British economy is weaker that the U.S. economy and is the reason why the British pound is the weaker currency.

Trading in the currency markets, however, is not always as clear cut as this example. A host of complex variables go into determining a country's currency including the country's political and financial structure, who the leaders of a given country are and most important what is actually happening within that particular country's economy.

Pound hits 23-year low on the dollar. What does this mean? originally appeared on BloggingStocks on Fri, 23 Jan 2009 16:45:00 EST. Please see our terms for use of feeds.

Ben Bernanke's buyout bailout is helping push the dollar to record lows. While this will make your travel outside the U.S. shockingly expensive, the Washington Post offers some ways you can invest to ease some of that pain:

• Buy foreign stocks. The U.S. investor converts dollars into the currency needed to buy the stocks, whether euros, pounds, yen or something else. Then, if the share price holds and the dollar falls, the investor gains when he sells the stock and converts the money back into dollars. If the share price has risen, the profit is even greater. Of course, if the dollar appreciates in the interim, the process works in reverse. As Barry Summerlin notes, my recommendation of Posco (NYSE: PKX) has gone up significantly since August, probably due in part to this effect.
• Buy U.S. companies with overseas earnings. buy the stocks of big, multinational U.S. companies that benefit from the weaker currency. A lower dollar helps boost U.S. exports by making them relatively cheap on world markets The Boeing Company (NYSE: BA) is among the beneficiaries of this trend.
• Buy CDs, mutual funds and exchange-traded funds packed with various currencies or linked to baskets of foreign exchange. More than $2.7 billion was invested in open-end currency funds by the end of July, up from $36 million at the end of July 2000, according to estimates by Lipper. So far, the falling dollar fund is the better bet: It is up 7.91% for the year, as of Thursday. The rising dollar fund is down 2.66%.

Continue reading Profiting from the dollar's decline

Profiting from the dollar's decline originally appeared on BloggingStocks on Sun, 23 Sep 2007 09:35:00 EST. Please see our terms for use of feeds.

The New York Times [registration required] reports that the subprime meltdown has zipped across the Pacific to wipe out the fortunes of Japanese housewives who trade currencies after putting their children to sleep. Betting an average of $9.1 billion a day -- 20% of daily foreign exchange (FX) volume -- on a decline in the Yen relative to the dollar, many of these housewives were wiped out when the August credit crunch caused U.S. hedge funds to panic -- driving up the Yen's value and tanking their trades.

Japanese online investors lost $2.5 billion trading currency in August. And for many Japanese households, housewives' FX trading had been kept in the closet. Japanese tradition frowns on making money through means other than hard labor -- such as market speculation.

But this taboo is out in the open thanks to Mayumi Torii, according to the Times, a 41-year-old mother of one who said she earned $150,000 since she started margin trading in currencies early in 2006. Torii now appears on TV promoting her FX Beauties Club so she can "stand on my own economically," a necessity she discovered after her first marriage ended in divorce, and she and her son had to live off her meager savings. "I never want to feel that vulnerable again," she said.

Continue reading Subprime plunge pings Japanese housewives

Subprime plunge pings Japanese housewives originally appeared on BloggingStocks on Sun, 16 Sep 2007 09:15:00 EST. Please see our terms for use of feeds.