No complaints here I agree with everything you've said but I still hold to what I was saying.. Its not always as simple as people investing in a currency for profit I guess that's what I'm saying,,
yes currencies can be considered an asset I guess but this isn't the foreign exchanges only use for it. In fact the majority of the 4 trillion plus volume traded everyday is simply from the banks clearing inventory balances, and that's just one example...
I'm finding it hard to convey what I mean but I know what I'm trying to say. Example... Lets say the hottest shit on the market right bnow was some start up company in Africa... USD EURO AUD JPY all flow in in exchange for whatever African currency is needed to trade in his country.. These flows (demand for African denominated currency) aren't because the African dollar is fundermentally strong... Its just a necessary in order to achieve the desired investment interest...
Those was a bad example but I hope you get my point.
Further if the African fundamentals diminish will these flows to that African company reverse? Not necessarily.. If the expected returns are greater to keep it in the company than exchanging it back into the other currencies then these flows will stay put.
Now you combine or replace this with the massive Bond and treasuries markets and you can sort of see that the FOREX market was simply the middle man for foreign investors in all these transactions...
Am I making any sense?
Maybe I'm on drugs
yes currencies can be considered an asset I guess but this isn't the foreign exchanges only use for it. In fact the majority of the 4 trillion plus volume traded everyday is simply from the banks clearing inventory balances, and that's just one example...
I'm finding it hard to convey what I mean but I know what I'm trying to say. Example... Lets say the hottest shit on the market right bnow was some start up company in Africa... USD EURO AUD JPY all flow in in exchange for whatever African currency is needed to trade in his country.. These flows (demand for African denominated currency) aren't because the African dollar is fundermentally strong... Its just a necessary in order to achieve the desired investment interest...
Those was a bad example but I hope you get my point.
Further if the African fundamentals diminish will these flows to that African company reverse? Not necessarily.. If the expected returns are greater to keep it in the company than exchanging it back into the other currencies then these flows will stay put.
Now you combine or replace this with the massive Bond and treasuries markets and you can sort of see that the FOREX market was simply the middle man for foreign investors in all these transactions...
Am I making any sense?
Maybe I'm on drugs
Time hides Nothing