Why should currency traders be interested in what’s going on in places like Russia, Turkey, China, and Myanmar? Because all the world’s monetary systems are connected. No matter how small or large a nation is, its fiat money is part of the giant puzzle that makes up the international financial world. Forex enthusiasts need to stay informed about global events so they can make informed trades.
In addition to staying in the loop on relevant current events, investors need to realize the importance of working with a reputable broker. Unfortunately, there are multiple unlicensed outfits vying to grab the attention of individuals who are new to the game. Even worse, a few of those unethical entities lure in unsuspecting customers. What’s the most effective way of avoiding that kind of trap? Sticking with regulated forex brokers is the surest tactic for staying safe, gaining access to the best investing tools, and learning how the markets work.
Why even trade forex at all? Why not just stick with traditional equities, commodities, and similar asset classes? There are plenty of valid reasons people gravitate to FX, including ease of trading, around-the-clock action, and more. If you want to take advantage of the recent wave of economic volatility and leverage the power of a forex account to aim for profits, it’s essential to do several things. First, open an account with a reputable broker. Second, review some of the latest news stories that impact national currencies. Finally, familiarize yourself with the unique benefits of having and using an FX account. The following points are useful starting points for beginning and advanced traders.
Myanmar’s Kyat in Trouble
After a military-led government took control of Myanmar last year, the nation’s leaders have fought to force locals to use the kyat instead of US dollars and euros in domestic transactions. Encouraging didn’t work well for the dictatorial leaders, so now they have turned to more muscular techniques, like outright bans against using foreign money within the borders. Foreign organizations don’t have to abide by the rule, but citizens do. The result is a huge black market in all types of non-local currencies. At the root of the situation is a profound distrust of the government and a decades-long reliance on nations like the US and the UK to serve as proxy suppliers of hard money for everyday transactions.
The Ruble Beats the Odds and Gets Stronger
Amid the Ukraine-Russia war, it’s more than surprising that the Russian ruble, one of the world’s oldest and most volatile forms of money, has come out of the melee strong and resilient. The power of the ruble is a lesson in what a dedicated government can do to turn a terrible situation into a positive one. After Russia invaded Ukraine in February, international sanctions drove the currency’s value to a historic low. At that time, it took more than 100 rubles to purchase a single US dollar. But in a few months, Russian authorities have intervened, bargained, coaxed, and cajoled their way to a ruble that now holds the title of the globe’s best performing national currency of 2022.
Turkey’s Lira Weakens by the Day
The Turkish lira has been experiencing a very bad year, and things appear to be growing worse. Inflation is running at about 70 percent, and there’s a huge shortage of foreign currency in Turkish private and government banks. In recent days the dam has broken as the lira dropped past the psychologically important rate of 16 to the US dollar. Trading at 16.3 as of late May, the lira is expected to have a terrible summer as Turkey’s economy continues to weaken.
Outflow of Foreign Capital Has Communist Government Scared
After several years of relative stability against the US dollar, the People’s Republic of China’s yuan currency is starting to tumble in value. One of the prime movers behind the development is the rapid outflow of non-Chinese capital. Already the domestic denomination has dropped four percent against the dollar and looks set to experience more of the same through the summer months. The nation’s recent Shanghai lockdown, outlawing of cryptocurrency ownership, and ongoing militaristic threats against its neighbors have turned the communist dictatorship into a pariah among international investment institutions and many corporations.
Liquidity and Leverage Make FX an Attractive Activity
Worldwide, two of the features that attract people to FX are the ability to use leverage in transactions and the availability of high liquidity. Because the trading markets are the largest of all the financial arenas, there’s never a delay in converting a position to cash. Plus, account holders who work with top brokers can usually benefit from a large amount of leverage, which makes it possible to control significant amounts of capital even with a modest-sized account.
