Press Release Summary: Currency trading is a new revenue stream adopted by many banks and financial institutions to increase their earnings on a daily basis.
Press Release Body: It is also about buying foreign currency, the most traded in the international market such as the US dollar, UK pound or the Euro, on a daily basis from the open market. It is sold either the same day or two-three days later when the demand for the particular currency is higher. Though the fluctuation in the currency rates is marginal, the earnings can be on the greater side since currency trading is carried out in the form of bulk. Only registered organizations and banks are entitled to engage in currency trading. Individuals and non-residents of a country cannot engage in currency trading. In some developing countries, only government agencies and banks can trade in currency. No individual can trade currency on his or her own. Normally, it is the federal bank of a particular country that stacks up foreign currency since it buys them in bulk.
Currency trading is regulated by the official stock exchange of a particular country. The price of the currency is fixed by the developments in the international market. The currency is traded on the basis of the rate it can fetch against a US dollar or Euro. All international currencies are traded against the US dollar since the international market transaction takes place in the US dollars. In the European Union countries, it is the Euro, which is active and strong. So stock exchanges in the European Union countries trade in the Euro currency against local currencies. Similarly, in Japan, it is the Yen, which is traded against the US dollar and in China; it is the Yuan, which is traded against the US dollar. In the Pacific Oceania region, it is the Australian dollar that rules the roost. Therefore, traders have a tendency to stack up the Australian dollar. However, worldwide, the most preferred currency for trading is the US dollar.
For an agency to trade in currency, it has to clear certain stringent norms and procedures. The bank should necessarily comply with the conditions laid down by the federal bank of the country. In many third world nations, only the government agencies and nationalized banks are eligible to engage in currency trading. There have been relaxations in case of certain agencies, which have been permitted to engage in currency trading. However, these agencies are constantly monitored to ensure that they are following the norms are laid down.
It is illegal for individuals to trade in currency in some countries. Any individual or agent found engaging in currency trading in violation of the stipulated rules could end up being penalized. There are chances that the agent could even lose the trading license and could be barred from all future trading in the stock exchange.
It is necessary for agencies and banks to keep a tab on the movement of the currency in the international market to make quick earnings. There are possibilities of the currency weakening against each other due to various forces acting on the market. Since the stock markets are extremely volatile, it is difficult to predict which way the currency will swing.
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