The eerie quiet on the currency exchanges

Article Abstract:

Foreign exchange dealers in London, England, are faced with stability in the currency market. This has led to a drop in the price of currency options since they are less likely to make a profit in stable conditions. The drop in volatility is not easy to explain. Some analysts argue in terms of fundamentals, while others argue that increased usage of currency derivatives means that currencies are less affected by economic news. There is also a view that central banks intervene less, though this is disputed.

Functions related to deposit banking, Foreign Exchange Dealers, Commodity Contracts Dealing, Currency options, Foreign exchange market

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Hedging your bets on the future

Article Abstract:

Futures contracts have a number of uses such as hedging, or protection from risk, as well as speculation. Investors expecting to receive money and forecasting a price rise for bonds can invest in futures allowing them to buy at current prices, to be sold at a profit should prices rise. If prices drop, the money received will purchase more bonds, offsetting the loss from the futures contract. Options involve less of a risk since only the original stake is at risk.

Study and teaching

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Checking our Barings

Article Abstract:

The dangers which can arise from investing in derivatives have been illustrated by the collapse of Barings. Other losses suffered by companies include 730 million pounds sterling lost by Shell from investing in foreign exchange futures. An investor seeking to avoid risk should avoid the futures market, but gains can be made using a small deposit. This is illustrated by a sample investment portfolio used to illustrate market trends and investment strategies.

Analysis

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