Forex for Begginers

Forex market trading consists of a huge volume of trades everyday but in the past this trading was only available to banks, huge corporations and currency dealers.

There was large minimum business size requirements and very strict financial requirements to be allowed to trace on the Forex market at that time. In 1998, it was made available to the general public to be allowed to trade and take advantage of the market’s extreme liquidity and strong currency exchange rates trends.

The major currencies that are traded on the Forex Market are the US dollar, the Euro, the Japanese yen, the British pound, the Swiss Franc, the Canadian dollar and Australian dollar.

The US Dollar is the most traded currency on the Forex Market. It is easier to begin trading using a currency that you are familiar with, if you happen to live in one of the countries that has currency on the market, because you can watch the newspapers and be able to judge the strength of your currency.

Trading with brokers.

Trading with brokers.
Foreign exchange brokers, unlike others financial brokers, do not take commission from customer; they only work for banks. Their roles are to bring together buyers and sellers in the market, to optimize the price they show to their customers and quickly, accurately, and authentically executing the traders' orders.
The majority of the foreign exchange brokers execute business via phone using an open box system— there is a microphone with the broker that let him communication on the direct phone lines to the speaker boxes in the banks. By using this way, all banks can hear all the deals which are being executed. Due to the open box system, a trader is also able to hear all prices quoted; whether the bid was hit or the offer taken; and the following price. What the trader will not be able to hear is the amounts of particular bids and offers and the names of the banks showing the prices. Prices are unidentified. Sometimes brokers charge a commission that is paid equally by the buyer and the seller. The fees are negotiated on an individual basis by the bank and the brokerage firm. Brokers show their customers the prices made by other customers either two-way ( bid and offer ) prices or one way ( bid or offer ) prices from his or her customers. Traders show different prices because they "read" the market in a different way; they have different opportunity and different interests. A broker who has more than one price on one or both parties will automatically optimize the price.That means, the broker will always show the highest bid and the lowest offer. Therefore, the market has right of entry to an optimal spread possible. Fundamental and technical analyses are used for predicting the future direction of the currency. A trader might analyze the market by hitting a bid for a small amount to see if there is any response. Another advantage is that brokers might provide a broader selection of banks to their clients. Some European and Asian banks have overnight desks for 24 hours optimization dealing with counterparts in American banks, adding to the liquidity of the market.

How Forex Trading Works..

How Forex Trading Works..
Currency trading is mainly about buy and sell activities. Currencies are traded on a price interest point (normally called pip) system. Every currency pair has their own pip value. The objective of a trader is to hold as many profitable pips as possible. Some pip values are fixed, but some can fluctuate depends on the currency gain or loses strength. Normally I trade by using margin trading, where small deposit is required to control much larger amount in the market. Here I will use 1 percent margin deposit so that $1000 control $100,000 of trade currency. $100,000 is the notional amount. Let me shows some major currency pair with the currency exchange rate and the pip values.
Currency
Currency exchange rate
Pip Value
(GBP/USD)
1.7204
$10.00 per pip (fixed)
(EUR/USD)
1.1789
$10.00 per pip (fixed)
(USD/CAD)
1.1642
$8.59 per pip (fluctuating)
(USD/JPY)
117.82
$8.49 per pip (fluctuating)
For GBP/USD, 1 pip movement can be from 1.7203 to 1.7204. That means from 1.7102 to 1.7202, it should be 100 pip movement. Lets look for another example, USD/JPY, 1 pip movement is from 117.82 to 117.83 and 100 pips movement is from 117.83 to 118.83.

Stocks Plummet

The major indexes all finished down by more than 4% today after the Treasury Secretary announced the Obama administration’s plan for a new bank rescue. The plan which features four main points on attacking the banking issue disappointed investors and is the cause for the steep drop in stocks today. The financial sector took a heavy hit today, down almost 6% as investors thought the plan was not enough to help the ailing bank stocks. The Dow is finished the day below the 8000 level, closing at it’s lowest point since November of last year. The main problem investors seemed to have with this plan was the lack of detail. The plan was a very rough outline of what the administration would do to rescue bank stocks and in this outline no new or ground breaking strategies were reported. Also announced today were more job cuts, this time from General Motors and Walmart. Job loss and subsequent creation is a main focus of the bailout plan which should soon be approved and sent to President Obama’s for approval. Tomorrow should be an interesting day for the markets as we wait and see if investors continue to sell after the rescue plan or use this as an opportunity to scoop up shares of cheap but fundamentally sound stocks.

Import volume rises by 29pc: Gold hits new peak

By Aamir Shafaat Khan KARACHI, Feb 19: The import of gold has increased by 29 per cent in terms of quantity and 91 per cent in value in the first seven months (July-January) of this fiscal year, the Federal Bureau of Statistics data showed. The data nullifies the gold dealers’ claim that gold imports were suspended for last many months after surging prices in the world markets. In July-Jan 2008-09 gold imports stood at 658 kg ($20...

India to Oppose Any U.S. Move Toward Protectionism

By Rakteem Katakey and Subramaniam Sharma

Feb. 20 (Bloomberg) -- India will oppose any move toward protectionism in the U.S. as Asia’s third-biggest economy spends more to stimulate demand to counter a drop in exports and factory output.

“We are already witnessing signs of protectionism in the world’s biggest economy,” Pranab Mukherjee, acting finance minister, said at a conference in New Delhi today. “We will need to argue against this trend at the international fora.”

Mukherjee’s statement follows similar concern raised by World Trade Organization Director-General Pascal Lamy earlier this month and pledges on closer scrutiny of national trade policies to guard against new barriers. Lamy has cautioned against protectionism, including a “buy American” clause in draft U.S. economic-stimulus legislation.

Economic expansion in India may slow to 7.1 percent in the year to March 31, the weakest pace since 2003, according to the government. India’s industrial production fell the most in almost 16 years in December and exports declined for a second straight month in November as the global recession damped demand.

The World Bank forecast a 2.1 percent decline in global trade this year, the first drop since 1982, after 6.2 percent growth in 2008. The WTO estimates last year’s growth at 4 percent.

The U.S. accounted for about 61 percent of India’s software and related services exports of $31.3 billion in the year ended March 31, 2007, according to the Web site of the National Association of Software and Service Companies.

Export Destination

North America is estimated to have contributed 16 percent of India’s exports in the year ended March 31, 2007, according to the Planning Commission, a government body that formulates five- year plans. Imports to India from the region accounted for 7.4 percent of the total in the period, it said.

Prime Minister Manmohan Singh is counting on interest rate cuts and steps including a farm loan waiver, the increase in salaries of 5 million government employees by 21 percent in the past nine months, reductions in some taxes in December and an extra spending of 1.5 trillion rupees ($30 billion) to stimulate the economy.

The government is making all efforts to ensure flow of credit especially for consumption, trade and investment, Mukherjee said today.

Jobs should be protected even if that means some reduction in compensation, Mukherjee said. India has asked state-controlled companies to help “maximize” employment, he said.

To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; Subramaniam Sharma in New Delhi at ssharma@bloomberg.net.
Source www.bloomberg.com

Karachi’s Exchange to Ease Stock Trading Limits

By Farhan Sharif and Khalid Qayum

Feb. 19 (Bloomberg) -- The Karachi Stock Exchange, Asia’s cheapest equity market, plans to ease trading limits this year to avoid a repeat of curbs that froze equity markets for four months and drove out overseas investors.

Pakistan’s biggest exchange may triple the current 5 percent limit that a stock can decline each day and introduce so-called circuit breakers that limit how much the entire market can fall, Adnan Afridi, managing director, said in an interview in Karachi.

“Our circuit breakers are a bit narrow by international standards,” Afridi said late yesterday. “We are looking at a combination of having wider circuit breakers, maybe 10 or 15 percent, and then having market halts, of say, 3 to 5 percent.”

Pakistan is seeking to boost investment in shares after its benchmark index declined 58 percent in 2008, the most in 18 years, because of political instability and an economic slowdown. Freeing up trading limits would attract more investors, said Tariq Iqbal Khan, chairman of Pakistan’s biggest money manager.

“If a stock has to fall 15 percent, it will either fall in one day or three days, the stocks have to come down to natural price,” said Khan, who manages the equivalent of $940 million in equities at National Investment Trust Ltd. in Karachi. “Nobody wants to trade in a value he feels is not realistic.”

The proposed market halts could stop trading for 30 minutes if the index rises or declines by a certain proportion, Afridi said. “We are studying different models,” he said.

Asia’s Lowest

The Karachi 100 index gained 2.4 percent to 6,022.44 today, the biggest advance among benchmark indexes in Asia. The KSE100 Index is trading at 4.6 times next year’s estimated earnings, the lowest among 14 Asia-Pacific equity indexes, according to data compiled by Bloomberg. The Karachi share market has declined 32 percent since the exchange lifted trading curbs on Dec. 15 that prevented the measure from falling below its Aug. 27 level.

The curbs were imposed after the exchange’s market value almost halved from the peak on April 4 amid a political crisis leading up to the resignation of President Pervez Musharraf and the breakup of the coalition government.

Investors stoned the exchange in July after a first attempt to impose limits failed to halt the slump that threatened to undo a 11-fold rally since 2001.

Overseas investors dumped $510 million of Pakistani stocks in the past 12 months, almost five times as much as in the same period a year ago, according to the National Clearing Co.

“Significant inflows are not expected in 2009,” Afridi said. “Our credibility has been affected more so by the length of time the floor was in place rather than the decision itself.”

The exchange waived transaction fees for cash-settled futures for three months to attract investors, Afridi said.

Futures market volumes “are zero at the moment because of what the market has been through,” Afridi said. “Investors are very hesitant to take any leveraged positions.”

To contact the reporters on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net; Khalid Qayum in Karachi, Pakistan kqayum@bloomberg.net.
Source www.bloomberg.com

Mortgage Plan Effect May Be Limited, Analysts Say

By Jody Shenn

Feb. 19 (Bloomberg) -- The effect of the Obama administration’s housing plan on home-loan bonds and borrowers will be limited by restrictions on which mortgages are eligible, according to Bank of America Corp. analysts.

The plan, announced yesterday, includes government payments to lenders such as bond investors, as well as to mortgage servicers and borrowers either before or after loans are reworked. It also will loosen Fannie Mae and Freddie Mac rules to allow more borrowers to refinance into lower payments, including some who owe more than their homes are worth.

Only about 50 percent to 60 percent of securitized prime jumbo or Alt-A loans meet the loan-modification standards requiring borrowers to live in mortgaged properties and owe no more than Fannie and Freddie’s loan limits, according to a report yesterday by Bank of America strategists including Akiva Dickstein and Vipul Jain. The refinancing plan will be limited by a standard preventing homeowners from qualifying if they owe more than 105 percent of their homes’ value, they said.

“Borrowers who do not qualify due to loan size can of course still have their loans modified by their servicers, but without the government incentives,” the New York-based analysts wrote. The refinancing plan “does little to help underwater borrowers,” they added.

Jumbo loans are larger than Fannie and Freddie, the government-chartered mortgage companies under federal control, can buy or guarantee, currently $417,000 in most areas and as much as $729,000. Alt-A loans went to borrowers who wanted atypical terms such as proof-of-income waivers, investment- property collateral or delayed principal repayment, without enough positive compensating attributes.

Mortgage Bonds

About $1.2 trillion of bonds backed by prime-jumbo or Alt-A mortgages, when including so-called option adjustable-rate loans, are outstanding, according to data from Memphis, Tennessee-based FTN Financial. The total amount of U.S. home-mortgage debt is $10.5 trillion, according to Federal Reserve data.

The refinancing plan covers loans already guaranteed or directly owned by Washington-based Fannie or McLean, Virginia- based Freddie, which help finance $5.3 trillion of residential debt.

The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes’ worth, according to a Feb. 3 report from Zillow.com. After a record boom, home prices are down 25 percent on average since mid-2006 amid a tightening of lending standards and an economic recession, an S&P/Case-Shiller index shows.

More Questions

Mortgage-bond analysts at Credit Suisse Group and Barclays Capital Inc. joined the Bank of America strategists in saying the refinancing plan lacked enough detail to predict how many more borrowers will replace their loans because of the program.

“If anything, the announcement of the new program created more questions than it answered,” the New York-based Barclays analysts led by Ajay Rajadhyaksha wrote in a report today. “This suggests to us the details for the plan are still being worked out.”

The plan will probably help four to five million homeowners refinance as the administration predicts, the analysts said, though the equation will be affected by details including whether Fannie and Freddie will waive fees for borrowers with little or no home equity and how the companies will be directed to deal with borrowers who currently have mortgage insurance.

Overall, the refinancing plan is “a big deal” and something mortgage-bond investors have been expecting to be created, Brian Ye, a debt analyst in New York at JPMorgan Chase & Co., wrote in an e-mail today.

‘Underwater’ Borrowers

Fannie and Freddie typically must have borrowers or lenders buy mortgage insurance on loans with less than 20 percent down payments or home equity. Federal Housing Finance Agency Director James Lockhart said today that the companies’ charters give him the flexibility to waive the requirement when they are “reducing risk,” the case with the program because lowering borrowers’ payments will reduce defaults on their loans.

When home loans already have the insurance “we will ask the mortgage insurers to roll it over,” Lockhart, their top regulator, said in a Bloomberg Television interview.

About 9 percent to 11 percent of loans backing Freddie mortgage securities issued in 2006 and 2007 with the most-common coupons exceed 105 percent of the homes’ value, making them ineligible for the refinancing under the standard for how far “underwater” borrowers can be, the Credit Suisse analysts in New York including Mahesh Swaminathan wrote in a report today.

Mortgage-Bond Losses

Mortgage-bond holders who paid more than face value for the debt may incur losses if refinancing means the securities are repaid faster than expected, cutting the value of the premium coupons on the bonds. More than 95 percent of Fannie or Freddie- guaranteed fixed-rate mortgage securities are trading above face value, according to Bloomberg data.

While the Bank of America analysts said about 90 percent of subprime mortgages underlying securities will be eligible for the loan-modification plan, the Barclays analysts wrote that payment reductions for the borrowers might not be enough to significantly reduce their defaults because they “typically have poor spending habits and high” non-mortgage debt burdens.

Overall, the modification program, which the administration predicted will cover three to four million loans, will have a “meaningful and beneficial effect” on home prices by cutting prime-mortgage defaults, the Barclays analysts said.

One possible consequence that may harm home prices: the extra loan volume created by the expected increase in refinancing may cause the “historically very high” difference between home- loan rates and the mortgage-bond yields that guide new-loan costs to persist for longer, according to a report yesterday by Citigroup Inc. mortgage-bond analyst Brett Rose.

That spread, which Rose attributed mainly to “capacity constraints” at loan originators, has meant loan rates haven’t fallen as much as mortgage-bond yields, which have been driven down by Federal Reserve and Treasury Department buying intended to lower financing costs to stabilize the housing market.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

Source www.bloomberg.com

Euro Rebounds on Talk of German Action to Protect Eurozone

Written by Joel Kruger, Technical Currency Analyst

The currency market is reversing course on Thursday with broad based USD gains finally stalling out in favor of a flight back into risk. The Euro is in the process of putting in a bullish reversal day following 7 consecutive negative closes. Momentum funds are on the bid in Eur/Jpy. Trade of the day recommendation is to sell Cable on a test of the 50-Day SMA.

Morning Slices

Fundys - The currency market is reversing course on Thursday with broad based USD gains finally stalling out in favor of a flight back into risk. The big story in the overnight session and primary driver of price action is said to have come from the reports that Germany has signaled that it would back any EU countries that are not able to refinance their own debt. On the data front, UK Public Finances were better than expected while Public Sector Net Borrowing was unimpressive after showing the smallest surplus since 1995. Meanwhile, the Swiss ZEW sentiment index showed an improvement coming in at -57.7 from a previous -66.7. Swissy had been initially hit overnight on talk that Swiss banking secrecy laws would be abolished, but the currency soon revcovered after the Swiss FinMin confirmed that the secrecy laws would be maintained. Germany’s DIHK released their latest survey which said that the weaker Eur/Usd exchange rate was starting to be a positive for Eurozone exporters. Nevetheless, the survey described the 2009 economic outlook as being “very bleak.” On Monetary policy, DIHK said that there was no need for additional ECB rate cuts. In Japan, the BoJ has left rates unchanged at 0.10% as expected while the government has downgraded its assessment of the economy for the 5th straight month and sees things deteriorating more rapidly with the economy in a severe state. European equities are tracking slightly lower while US futures point to a higher open. Crude oil trades higher ahead of today’s data, while gold is seen down nearly 1%. Looking ahead, there is plenty of data on the calendar in the North American session starting off with US PPI (-2.6% expected) and initial jobless claims (620k expected) at 13:30GMT. Philly Fed (-25 expected) is slated for 15:00GMT, while on the Fed circuit, Lockhart is scheduled to speak in Alabama at 18:15GMT.

Quant -

For information on the above tables, please visit our Guide to Morning Slices Quant section.

Techs - EUR/USD is in the process of putting in a bullish reversal day following 7 consecutive negative closes. There is scope for additional corrective activity over the coming days back towards the 20-Day SMA at 1.2895 but ultimately, we would expect to see the latter cap gains ahead of fresh downside through 1.2500. In the interim, additional intraday rallies are seen capped by the 1.2705-50 former support now turned resistance. The key level to watch below now comes in by 1.2500. USD/JPY trades relatively flat heading into the US session of trade but we would expect to see a minimum test on key resistance at 94.60 which represents the neckline of a major double bottom formation. The pair also now trades above the daily Ichimoku for the first time since early September and it will be interesting to see if the price can hold above the latter into the close. Key levels to watch over the coming session come in by 94.60 and 93.30. GBP/USD (See Below). USD/CHF has been slowly grinding out fresh highs with the market on the verge of a push to challenge the trend highs from 2008 at 1.2300. In the interim, key levels to watch over the coming session come in by 1.1830 and 1.1650.

Flows – CTA shorts stopped out of Eur/Jpy positions on momentum buying; Japanese exporter and French bank offers into 120.00. Swiss bank on the bid in Eur/Gbp. Asian accounts and model funds on the bid in Cable while Russian names on the offer. German bank cited as a large buyer of Aussie.

Trade of the Day - GBP/USD: With the USD showing so well bid over the past several days, it is no surprise that we have been seeing a bounce into Thursday to allow for some form of a relief rally. While Sterling has held up on a relative basis, the currency pair still remains locked in a very well defined downtrend and should continue to be sold into rallies. We will once again utilize the Average True Range (ATR) indicator to help target an ideal entry point for a short trade. The ATR in Cable comes in at 305 pips. Based off of the current daily low of 1.4205, this would project a daily high by 1.4510. However, there is no significant viable short-term resistance at 1.4510, and given the ability for this pair to often overshoot its ATR on reversal days, we will choose an entry point for our short trade a little higher up by 1.4585 which coincides with the 50-Day SMA. The 50-Day SMA has proved to be a formidable cap on rallies throughout much of the downtrend and we expect that it will continue to do so, particularly after seeing a 380 pip rally in the day. Strategy: SELL@ 1.4580 FOR A 1.4055 OBJECTIVE, STOP @1.4715. Recommendation to be Removed if Entry not Hit on Thursday.



Fundamental Catalyst – The USD rally has stalled out on Thursday with much of the price action being driven by talk of more efforts in Europe to stimulate the local economies. Reports have indicated that Germany will be prepared to support the broader Eurozone economy should any individual countries within the region find themselves in a position where they can not refinance their own debt. While this is certainly a welcome development and necessary step in attempting to ameliorate the dire economic situation, it should by no means be a signal for increased risk appetite and a flight from safety back into higher yielding and more risky assets. We therefore discount the current rebound and attribute the move as more of a necessary correction, most probably originating from profit-taking from shorter-term speculative accounts.

Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
To contact the author of this report, e-mail jskruger@fxcm.com

Quant Section Prepared by David Rodriguez, Quantitative Analyst for DailyFX.com
To contact, e-mail drodriguez@fxcm.com

Source www.dailyfx.com

WHAT IS THE DOLLAR AND GOLD RALLY TELLING US?

Capital flight has driven the US dollar higher. On a day when President Obama signed the Economic Stimulus Package into law, the banking turmoil in Europe and the resignation of Japan’s Finance Minister has turned investors away from other major currencies. Even though the greenback is yielding next to nothing, investors are willing to park their money with the US government as long as they keep it safe. The lack of negative game changing news from the US has been very positive for the US dollar. The greenback and gold prices have been moving in tandem since January 14th. This unusual correlation is actually sending a strong message to currency traders.

The Dollar and Gold Rally

It is not very often that we see the US dollar and gold prices move in the same direction. Since gold is priced in dollars, the value of the yellow metal tends to fall when the dollar rises and rise when the dollar falls. However this has not been the case since January 14th as the rally in the US dollar corresponds with the rise in gold prices, which closed today at a 7 month high of $970 an ounce. The last time we saw this traditionally negative correlation turn into a positive one was in 1982. At that time, recession hit many countries including the US. Although the rise in gold prices can be partially attributed to future inflation problems, the cohesive movement in the value of gold and the US dollar suggests that central banks around the world are losing credibility. There are growing concerns that a time bomb could explode in Europe leading to more troubles for the region as a whole. If that is the case, there may not be any safer form of investment than gold. The rally in the US dollar and gold is telling the market that investors are worried about global economic stability outside of the US and therefore they are preparing for the worst.

Source www.fx360.com

US DOLLAR: WAITING FOR OBAMA

With US equity and bond markets closed for Presidents Day, trading was relatively quiet for currencies. The G7 meeting did not lead to any fireworks but the dollar did gap higher against all of the major currencies except for the Japanese Yen at the Asian open on Sunday. Despite the Congressional approval of the $787 billion stimulus package, the US dollar and Japanese Yen have strengthened across the board which indicates that risk aversion dominates. So far, the prospect of the bill being signed by President Obama has not helped the market. The official G7 statement singled out the Chinese Yuan but not the Japanese Yen. The tone towards China was rather conciliatory with the Group of Seven welcoming China’s fiscal stimulus measures and their steps towards a more flexible exchange rate. These comments and lack thereof suggests that the US is trying to play nice after Geithner suggested that China may be branded a currency manipulator. As for Japan, the lack of comments suggest that no is interested in intervening to stop the Yen from rising anything soon. There was no US economic data released this morning, but a number of reports are due for release over the next 24 hours. This includes the Empire State Manufacturing survey, the Treasury International Capital flow report and the NAHB housing market index. All of these are Tier 2 economic data which means that they should not have much of an impact on the US dollar. Instead, all eyes will be on how the market reacts to the official announcement of the Economic Stimulus Bill.
Source www.fx360.com

Forex Markets and Trading

Unlike stock markets, where investors have access to the same prices, the Forex market is divided in different access levels. What does this mean? According to their financial position, main players have different functions and privileges. Above all levels is the inter-bank market. Here, governments, central banks and important financial institutions are given the opportunity to trade their own currencies. Within this inner circle, the spread, which is the difference between bids and asking prices, is extremely low and convenient and unavailable to players outside this market; such as retail investors, small trading parties and speculators.

As we descend access levels, spreads widen. In order to gain better spreads, participants need to guarantee large numbers of transactions, while investing large amounts of money. The more you have the more you get! The more money that is traded on Forex, the bigger the size of the market line. As we move from a higher level to a lower one, the line gets smaller and the spread higher.

It sounds all pretty complicated which is why Forex should be studied before you enter into it, familiarize yourself with all the terminology and of course find a reputable broker with whom you can explain what your expectations are. High gains usually means higher risk, slower long term gains mean a long term commitment and more gradual increments of growth.

The top inter-bank Forex market accounts for half of all world transactions and the remainder is carried out by the lower levels: investment banks, large multi-national corporations, large hedge funds and retail Forex – metal market makers. Since 1999, the year in which the Euro was created, many banks trade in the Euro with the US dollar losing its position as the centre of market exchange with new growing economies in China and Asia.

The Forex exchange rates or trading rates mainly depend on the supply and demand for any given currency. These important factors change rapidly and constantly, according to the economical and political situation of different countries. Political instability in fact will have a negative impact on the nations’ economy as will a country’s export deficit.

The Forex market reflects a lot on what goes on both politically and economically in the world at any given moment and can often be the precursor in foreseeing the development of future global events. Forex trading is instantaneous and with the advent of the internet it has become accessible to anyone with a computer and a fast internet connection.

Foreign Exchange Market

The foreign exchange market (currency, ForEx, or FX) market is where currency trading takes place. It is where banks and other official institutions that facilitate the buying and selling of foreign currencies. ^[1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.

Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.^[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.^[3]

The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies

Source www.wikipedia.com

Forex Trading

Forex trading isn’t strange words for those who looking forward to make quick profit in the financial market. Most investors will have at least hear or read about Forex trading. If Forex is a new term to you, please do read the Introduction to the Forex market before proceed reading this Forex trading article.

Forex trading is said to be the highest risk with highest return investment (or speculation game to be more accurate) in the financial market. The amount traded in the Forex market is much larger than any stock market or even combining few stock markets. Forex trading is simply a world wide trading market running 24 hours from Monday to Friday.

Everyday, there are new Forex traders entering into trading Forex. Some of them don’t even fully understand how Forex is traded but have already trading Forex. They are not idiot who want to burn their hard earned money, it’s just because Forex market is simply too lucrative market to enter with extreme high return. Any Forex traders can easily make a double return just in few minutes time trading Forex.

Forex trading is the trading of buying or selling certain currency. For example, buying US Dollar, then selling it later at a higher price to gain profit. Forex traders may also first sell US Dollar and later on buy it back at a lower price with the same gaining profit. It’s simple strategy of selling price minus buying price to make profit. In Forex trading, we just treat currency as a good, buy it and sell it.

You might now think how can Forex trading make huge profit just by selling and buying currency? Forex is traded using margin, Forex traders don’t need to full amount to buy any currency. For example, Forex traders just need 1000 Dollar to buy up 100,000 Dollar. This allows any Forex traders to make huge profit with little money.

Another important factor that any Forex traders can make huge profit is the high fluctuation for currency. Every day every seconds, the currency exchange rate is moving up and down, the Forex exchange rate fluctuate more heavily whenever there is any important economic data being released.

Forex trading is simply sounds too easy for anyone to make profit in very short time. But before you committed into Forex trading, it is strongly advised to have full understanding in Forex trading. Do read up other Forex trading articles in this website and share Forex trading knowledge in the Forex forums.

Source www.forex.com.pk

Introduction to Foreign Exchange Markets

Being the main force driving the global economic market, currency is no doubt an essential element for a country. However, in order for all the countries with different currencies to trade with one another, a system of exchange rate between their currencies is needed; this system, is formally known as foreign exchange or currency exchange.

In the early days, the system of currency exchange is supported solely by the gold amount held in the vault of a country. However, this system is no longer appropriate now due to inflation and hence, the value of one’s currency nowadays is determined through the market forces alone. In order to determine the value of a currency’s exchange rate, two main types of system is used which is floating currency and pegged currency.

For floating exchange rate, its value is determined by the supply and demand of the global market where the supply and demand is bound by all these factors such as foreign investment, inflation and ratios of import and export. Normally, this system is adopted by most of the advance countries like for example UK, US and Canada. All of these countries have a similarity where their market is well developed and stable in economic terms. These countries choose to practice this system due to the reason where floating exchange rate is proven to be much more efficient compared to the pegged exchange rate. The reason behind this is because for floating exchange rate, the market itself will re-adjust the exchange rate real-time in order to portray the actual inflation and other economic forces. However, every system has its own flaw and so does the floating exchange rate system. For instance, if a country suffers from economic instability due to various reasons such as political issues, a floating exchange rate system will certainly discourage investment due to the high risk of suffering from inflationary disaster or sudden slump in exchange rate.

Another form of exchange rate is known as pegged exchange rate. This is a system where the value of the exchange rate is fixed by the government of a country and not the supply and demand of the market. This system is called pegged exchange rate because the value of a country’s currency is fixed to another country’s currency. As a result, the value of the pegged currency will not fluctuate unlike the floating currency. The working principle behind this system is slightly complicated where the government of a country will fixed the exchange rate of their currency and when there is a demand for a certain currency resulting a rise in the exchange rate, the government will have to release enough of that currency into the market in order to meet that demand. However, there is a fatal flaw in this system where if the pegged exchange rate is not controlled properly, panics may arise within the country and as a result of that, people will be rushing to exchange their money into a more stable currency. When that happens, the sudden overflow of that country’s currency into the market will decrease the value of their exchange rate and in the end, their currency will be worthless. Due to this reason, only those under-developed or developing countries will practice this method as a form to control the inflation rate.

However, the truth is, most of the countries do not fully practice the floating exchange rate or the pegged exchange rate method in reality. Instead, they use a hybrid system known as floating peg. Floating peg is the combination of the two main systems where one country will normally fixed their exchange rate to the US Dollars and after that, they will constantly review their peg rate in order to stay in line with the actual market value.

The Foreign exchange market, or commonly known as FOREX, is the largest and most prolific financial market because each day, more than 1 trillion worth of currency exchange takes place between investors, speculators and countries. From this, we can deduce that the actual mechanism behind the world of foreign exchange is far more complicated than what we may already know, and that, the information mentioned earlier is just the tip of an iceberg.

Source www.forex.com.pk

What Is The Difference Between Forex and Futures?

1. A Forex trader could trade more transaction compared to the futures market (the trading volume could be a times larger), and the risk will be strictly under control. The trading volume of the Forex market is 46 times larger compared to the futures market, moreover Forex traders could make more profit from the Forex market due to the larger trading volume (the transaction volume is a few times larger), the REFCO Switzerland rich transaction platform allowed transaction between 1-100 times to be carry on, moreover a Forex trader could decide his or her own transaction amount, for example: Your account has $30,000, the basic transaction unit is each $1,000 (which transaction amount in $1.00, million), namely, so the proportion of the margin of each transaction unit is 100:1.
   
   
2. The risk of the Forex trader is under control, such margin call will not happen compared to futures, through the Forex trading system, your risk will receive the strict limit, even if your margin if lower then the deposit required, the Forex trading system will automatically settle your position, this means even if a Forex trader suffered losses, moreover if the market is suffering from a disaster fluctuation, your loss could not surpass your account amount. In order to understand the advantages, please apply for the demo account to carry on the complete zero risk.
   
   
3. A Forex trader will receive a large limitation of liquidation and a relatively fair market because the trading volume of the Forex market is large and it is also the largest liquidation market in the world. At present the trading volume in the Forex market is 140 billion Dollars, such big market will completely digest your transaction cash.
   
   
4. A Forex trader may do 24 hours transactions and other markets are different, the Forex market is a 24 hour linkages market, it starts from every Sunday before dawn Australian Sydney market, substandard collect the transaction center Singapore, Tokyo, London, Frankfurt to New York continuously to open, such linkage market enable you to do 24 hours transactions, also provide flexibility for Forex trader to do transaction.

Source www.forex.com.pk

Forex Charts

Forex charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates.

In order to help the investor attempt to predict when or in what direction a rate may change, advisors provide forex charts. Quality forex websites provide subscribers with a daily newsletter that includes a forex chart, forex signals and a forex forecast.

There are a variety of forex charts available for the investor to use and study. Some are very simple using only a couple of forex signals or indicators and are ideal for beginners. Others include 30 or 40 forex signals or indicators and live on-line streaming data so that the investor may analyze trades quickly and accurately.

In order to make an accurate forex forecast, it would seem that the more indicators, the better, but some analysts prefer a simpler system.

The idea behind studying forex charts is that history repeats itself. Instead of trying to “see the future”, a forex forecast evaluates the past. That is to say that the analyst who is responsible for attempting to predict future currency moves analyzes what happened to an exchange rate yesterday, last week, last month or last year and uses this knowledge to the best degree he knows how.

Some people trade short term, some intermediate term, and some long term. All three types of traders may benefit from the use of forex charts, just adapted to their own trading time frame.

Investors also create their own forex charts to evaluate their own performance. Creating a forex strategy for oneself is the goal of many investors. Instead of looking to a professional to analyze forex signals, these investors choose to create their own forex forecast.

Others, however, create their own strategy but also follow the opinions of professional currency traders at the same time. It all depends on your personal preferences.

There are other forex charts that deal with known correlations between two currency pairs, that is, how they move in relation to each other. Some exchange rates are known to affect other exchange rates, either by moving in the same or the opposite direction depending on the correlation.

Charts are available that explain these correlations in detail and show which pairs have strong correlations or strong negative correlations, so that an investor can use the movement of the exchange rate of one currency as a signal to trade another currency. These correlations are also the basis for some forex forecasts.

It can be difficult and overwhelming to enter the world of forex trading alone. Experts recommend education, practice with a demo account and advice from a reputable broker who is backed by a quality institution. Learning to read forex charts and evaluate forex signals is a skill that comes with time, skills that are essential when an accurate forex forecast is the the goal.

Source www.forex.com.pk

Brokers Directory \ Pakistan

H & H EXCHANGE CO. (PVT) LTD. (KARACHI) H & H - Pakistan's first Exchange Company. Granted license by the State Bank of Pakistan to carry out foreign exchange business. We also deal in cash currencies, foreign remittance... More DOLLAR EAST EXCHANGE COMPANY (LAHORE) Dollar East Exchange Company (Pvt.) Limited is a leading exchange company in Pakistan. The company is one of the pioneers to start currency exchange business in the country. It was... More EMIRATES GLOBAL ISLAMIC BANK LIMITED (EGIBL) (KARACHI) Alhamdolillah, Emirates Global Islamic Bank Limited, a dedicated Islamic Commercial Bank, commenced operations in February 2007. Presently the Bank has ten branches in Pakistan (5 ... More GLAXY EXCHANGE (PVT.) LTD (KARACHI) KHANANI & KALIA INTERNATIONAL (PVT.) LTD. (KARACHI) Khanani and Kalia International (KKI) is a leading and trusted name in the business sector of Pakistan. Khanani and Kalia (KKI) being the pioneer of foreign currency business in Pa... More ZARCO EXCHANGE COMPANY (PVT) LTD. (LAHORE) The ZARCO Exchange Company is a respected financial institution that provides dependable Exchange and Transfer services to satisfied customers throughout Pakistan. Our company has ... More A KHANANI AND KALIA MONEY EXCHANGE (ISLAMABAD) Since a last decade, Khanani & Kalia International (Pvt) Ltd. has been known by its customers for its best quality services at the national level. But now Khanani & Kalia has come ... More A TO Z MONEY CHANGER (KARACHI) A.R.K. EXCHANGE (KARACHI) AA EXCHANGE COMPANY (PVT) LTD (ISLAMABAD) AAKRA MONEY EXCHANGE (KARACHI) ABID CURRENCY (PESHAWAR) AHMAD MONEY CHANGER (LAHORE) AJMAIR INTERNATIONAL (ISLAMABAD) AL-ABBAS ENTERPRISES (RAWALPINDI) AL-MUZHER MONEY CHANGER (LAHORE) AL-RAHIM INTERNATIONAL (KARACHI) ALI HAIDER MONEY EXCHANGE (LAHORE) ALI INTERNATIONAL (KARACHI) ALLIED GROUP OF BUSINESS (ISLAMABAD) ARY INTERNATIONAL EXCHANGE (KARACHI) ASMA MONEY EXCHANGER'S (LAHORE) AYLIA FINANCIAL SERVICE (ISLAMABAD) BANK OF PUNJAB (KARACHI) BIG BOARD ADVISORY SERVICE (KARACHI) CAPITAL EXCHANGE CO. LTD (KARACHI) CASH CORNER CURRENCY EXCHANGE (RAWALPINDI) CHANDA & CO (KARACHI) CHANDA E.C (B) PVT. LTD. (KARACHI) CHANDA MONEY CHANGERS (KARACHI)

Country: Pakistan Capital: Islamabad Currency: Pakistan Rupee (PKR) Central Bank: State Bank of Pakistan Security Commission: Securities & Exchange Commission of Pakistan Stock Exchanges: Islamabad Stock Exchange Karachi Stock Exchange Lahore Stock Exchange

First Prev 1 2 3 4 Next Last (Page 1 of 4)

Source www.forex.com.pk

Banks directory in karachi Pakistan

ABN-AMRO BANK 16 Abdullah Haroon Road Saddar Ph. 5687592-5687580-5687581 5687582 Fax: 5683432	AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN ST-4/3,Block-1,Scheme #36, Gulistan-e-Jauhar Ph. 8113695-8112801-8113617
AL-FAYSAL INVESTMENT BANK LTD. First Floor,Block "A" F.T.C. Shahrah-e-Faisal Ph. 5660476-5660472-5660475-5660473 Fax: 5687130	AL-MEEZAN INVESTMENT BANK LTD. 4th Floor,Block C,F.T.C.Centre, Shahrah-e-Faisal Ph. 5650776-5650771-5650772-5650773 Fax: 5650763
ALBARAKA ISLAMIC BANK B.S.C. (E.C.) Lakhani Centre, I.I.Chundrigar Road Ph. 2636265-2636261-2636262-2636263 Fax: 2635045	ALLIED BANK OF PAKISTAN LTD. N.I.C.,Building,13th Floor,Abbasi Shaheed Road Shahrah-e-Faisal Ph. 5670379-5670371-5670372-5670373 Fax: 5683312
AMERICAN EXPRESS BANK LTD. Shaheen Commercial Complex,Dr. Ziauddin Ahmed Road I.I.Chundrigar Road Ph. 2630349-2630343-2630344-2630345 Fax: 2631803	AMERICAN EXPRESS BANK LTD. TRAVEL RELATED 14th Floor,Shaheen Complex,Dr. Ziauddin Ahmed Road I.I.Chundrigar Road Ph. 2630279-2630260-2630261-2630262 Fax: 2624990
ANZ GRINDLAYS BANK 14 A,Block-6, P.E.C.H.S. Ph. 4538045-4538044-4538042	ANZ GRINDLAYS BANK 72 S,Block-2, P.E.C.H.S. Ph. 4550199-4553960-4553437
ANZ GRINDLAYS BANK Hasan Chambers,DC-7,Block-7,Kehkashan, Clifton Ph. 5871892-5871891-5868744-5838602	ANZ GRINDLAYS BANK Hotel Metropole,Abdullah Haroon Road Saddar Ph. 5660432-5660423-5671207-5671208
ANZ GRINDLAYS BANK I.I.Chundrigar Road Ph. 2412676-2412671-2412672-2412673 Fax: 2437102	ANZ GRINDLAYS BANK Kandawalla Building,M.A.Jinnah Road Saddar Ph. 7210539-7210282-7226935
ANZ GRINDLAYS BANK SB-9,Block 13-B,University Road Gulshan-e-Iqbal Ph. 4980906-4982213-4980907	ASKARI COMMERCIAL BANK LTD. Saima Trade Towers I.I.Chundrigar Road Ph. 2630733-2630731 Fax: 2631176
Number of Pages 1 2 3 4 5 More Banks >

Source www.forex.com.pk

US Dollar Report; International

Rupee continues to remain unchanged versus dollar in the kerb dealings

The national continued to show no change versus dollar in the kerb market today. The American dollar kicked off new day’s trading at Rs.79/00, did not show any change and ended the day at the same price at close of markets on Wednesday. In the international, the dollar and the yen rose for a second day against the euro on concern the U.S. government’s bank-rescue plan will fail to revive lending, boosting demand for the two currencies as a haven. The yen also gained against higher-yielding currencies such as South Korea’s won and Sweden’s krona and the cost of protecting Asia-Pacific bonds from default rose after Treasury Secretary Timothy Geithner failed to provide details on how he will help banks cope with toxic assets. The euro weakened before a report tomorrow that may show European industrial production dropped the most in almost 23 years. “The plan is not the quick fix investors were hoping for, so there’s obvious disappointment,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “Risk aversion will probably spur them to seek the relative safety of the dollar and the yen in the near term.” The dollar strengthened to $1.2890 per euro as of 1:05 p.m. in Singapore, after gaining 0.7 percent yesterday. The yen climbed to 116.51 per euro after appreciating 1.8 percent yesterday, the first advance in four days. Japan’s currency traded at 90.38 per dollar from 90.47.

Source: www.bloomberg.com

US Dollar Report; Inter Bank

Bearish trend continued to prevail in the dealings as rupee shed 0/30 paisas versus dollar amid demand of US currency rose. The US dollar started off new day’s trading at Rs.80/80, gained more grounds and was changing hands at Rs.81/10 at close of markets on Friday.

On the international desks, the dollar fell against the euro and the yen on speculation a government report will show the U.S. economy lost the most jobs since 2003, bolstering the case for the Federal Reserve to lower interest rates.

The U.S. currency also declined versus the British pound as futures traders increased bets the Fed will cut borrowing costs by half a percentage point to 0.5 percent compared with a benchmark rate of 3 percent in the U.K. A Labor Department report today may also show the unemployment rate in the U.S. rose to a five-year high as the global economic downturn deepened.

Source www.forexpk.com

The dollar fell to $1.2753 per euro at 2:07 p.m. in Tokyo from $1.2715 late yesterday in New York. Against the pound, it declined to $1.5683 from $1.5627. The U.S. currency bought 97.53 yen from 97.75. The euro was little changed at 124.35 yen. The dollar may fall to $1.2830 versus the euro today, Ito said.

US Dollar Report; Kerb

Demand helps dollar gain versus rupee in the kerb

The national currency shed grounds versus dollar in the kerb dealings today. The American dollar kicked off new day’s trading at Rs.79/00, posted more gains and was trading at Rs.79/10 at close of markets on Friday. Thus, rupee ended the day on a negative note versus dollar in the open market. In the international, the dollar and gold will extend their gains on investor risk aversion as the precious metal departs from its correlation with crude oil, according to UBS AG. The U.S. currency in past years traded in the opposite direction of gold and crude oil. In 2009, the precious metal and oil diverged, with the dollar and gold rallying on demand for the safest assets while the global economic recession kept the price of petroleum low. “The shift now in these relationships shows how the greenback is benefiting further from risk aversion and slumping global growth this year,” wrote Mansoor Mohi-Uddin, chief currency strategist at UBS in Zurich, in a research note today. “Safe-haven demand is driving bullion higher again. In contrast, fears about global growth and the ability of the authorities in the G-7 countries to avert an extreme recession are pushing oil prices further down.” The U.S. currencies will strengthen to $1.20 by the end of the year and gold will appreciate further as investors seek refuge from global economic turmoil, according to UBS. Gold rose 5.5 percent last year, trading at $947.40 today, while crude dropped 54 percent in 2008, reaching $33.94 a barrel today. The dollar traded at $1.2823 per euro after appreciating 4.4 percent last year. Source www.forexpk.com

From the International Desks

Yen, dollar post weekly advance as havens on stimulus concern

The yen and dollar recorded weekly gains against most of the other major currencies as concern U.S. plans to end the recession and the financial crisis will fall short spurred demand for havens. Japan’s currency and the dollar advanced more than 3 percent versus the South African rand and Swedish krona this week as a lack of detail in the U.S. Treasury’s financial recovery plan encouraged investors to repatriate funds. Finance ministers and central bankers of the Group of Seven major industrial nations said in a draft statement that “excess volatility and disorderly movements” in exchange rates should be avoided. “The stimulus package is not what people were hoping for,” said Alan Kabbani, a senior currency trader at Wachovia Corp. in Charlotte, North Carolina. “They need to find a way to fix the banking industries. So far, we haven’t heard that, which means there’s more risk in the market, which is good for the yen and the dollar.” The yen advanced 0.4 percent to 118.37 versus the euro this week from 118.85 on Feb. 6. It dropped 1.2 percent at 4:24 p.m. in New York, compared with yesterday. The dollar appreciated 0.5 percent to $1.2874 per euro from $1.2940, weakening 0.1 percent today. The dollar was little changed at 91.94 yen this week after increasing 1.1 percent today. Chile’s peso was one of the biggest gainers against the dollar today among the 177 currencies tracked by Bloomberg after the central bank cut the target lending rate yesterday by 2.5 percentage points to 4.75 percent, the sharpest reduction in at least a decade. The currency advanced as much as 3.4 percent to 573.92, the strongest level since Oct. 3. Russia’s Ruble Russia’s ruble posted its biggest weekly rally against the dollar since December 1998 after Bank Rossii raised its interest rate on loans secured with bonds or other collateral through repurchase auctions twice in 10 weeks to force banks and companies to convert foreign currency. The ruble gained 4.4 percent to 34.5938 versus the dollar this week. G-7 officials will continue to monitor currency markets closely and cooperate as appropriate, finance ministers and central bankers meeting in Rome said in the draft statement. “The key is that they did not specify any single currency by name, so there’s likely to be only a muted reaction,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “We may see a much weaker yen in the weeks ahead.” Since late October, when the G-7 expressed concern about the yen’s “excessive gains,” the currency climbed 0.9 percent. It appreciated 23 percent against the dollar in 2008, hurting overseas profits for such exporters as Toyota Motor Corp. Yen Versus Rand The yen climbed 3.8 percent to 9.25 versus the South African rand and 3.4 percent to 10.96 against Sweden’s krona this week on speculation Japanese investors are selling higher-yielding assets and repatriating funds as the global recession deepens. Japan’s target lending rate of 0.1 percent compares with 10.5 percent in South Africa and 2 percent in Sweden. The U.S. House passed today a $787 billion economic stimulus plan designed to help repair the economy through tax cuts for businesses and families and a half-trillion dollars in federal spending. The chamber voted 246-183 for the measure with no Republicans in favor. The Senate plans to approve the package later today and send it to President Barack Obama for signing. Treasury Secretary Timothy Geithner, speaking on Feb. 11 before the Senate Budget Committee, defended his strategy of taking time to work out the details of a separate plan to shore up the financial industry. Dollar Versus Rand The dollar rallied 3.8 percent to 9.9370 South African rand and 3.6 percent to 8.3905 kronor this week as investors sought refuge in the world’s reserve currency. Coca-Cola Co., the largest soft-drink maker, said this week that the strong dollar reduced fourth-quarter profit, while PepsiCo Inc., the second-largest, said it raised prices to counter higher commodity costs and a gain in the greenback. The euro fell this week versus the dollar after the European Union’s statistics office said today gross domestic product in the 16-nation region decreased 1.5 percent, the most since euro- area GDP records began in 1995. The pound was poised for its first weekly loss against the dollar and euro since Jan. 23 after Bank of England Governor Mervyn King said this week that the economy is in a “deep recession” that may spur Bank of England policy makers to lower the 1 percent target lending rate further. Sterling dropped 2.3 percent to 89.60 pence per euro and 2.7 percent to $1.4394 this week after respective gains of 0.6 percent and 0.9 percent today.

Inter Bank Comments

Rupee depreciates versus greenback in the interbank dealings

Bearish trend continued to prevail in the dealings as rupee shed 0/30 paisas versus dollar amid demand of US currency rose. The US dollar started off new day’s trading at Rs.80/80, gained more grounds and was changing hands at Rs.81/10 at close of markets on Friday. On the international desks, the dollar fell against the euro and the yen on speculation a government report will show the U.S. economy lost the most jobs since 2003, bolstering the case for the Federal Reserve to lower interest rates. The U.S. currency also declined versus the British pound as futures traders increased bets the Fed will cut borrowing costs by half a percentage point to 0.5 percent compared with a benchmark rate of 3 percent in the U.K. A Labor Department report today may also show the unemployment rate in the U.S. rose to a five-year high as the global economic downturn deepened. The dollar fell to $1.2753 per euro at 2:07 p.m. in Tokyo from $1.2715 late yesterday in New York. Against the pound, it declined to $1.5683 from $1.5627. The U.S. currency bought 97.53 yen from 97.75. The euro was little changed at 124.35 yen. The dollar may fall to $1.2830 versus the euro today, Ito said. Source www.forexpk.com

Open Market Analysis

Demand helps dollar gain versus rupee in the kerb

The national currency shed grounds versus dollar in the kerb dealings today. The American dollar kicked off new day’s trading at Rs.79/00, posted more gains and was trading at Rs.79/10 at close of markets on Friday. Thus, rupee ended the day on a negative note versus dollar in the open market. In the international, the dollar and gold will extend their gains on investor risk aversion as the precious metal departs from its correlation with crude oil, according to UBS AG. The U.S. currency in past years traded in the opposite direction of gold and crude oil. In 2009, the precious metal and oil diverged, with the dollar and gold rallying on demand for the safest assets while the global economic recession kept the price of petroleum low. “The shift now in these relationships shows how the greenback is benefiting further from risk aversion and slumping global growth this year,” wrote Mansoor Mohi-Uddin, chief currency strategist at UBS in Zurich, in a research note today. “Safe-haven demand is driving bullion higher again. In contrast, fears about global growth and the ability of the authorities in the G-7 countries to avert an extreme recession are pushing oil prices further down.” The U.S. currencies will strengthen to $1.20 by the end of the year and gold will appreciate further as investors seek refuge from global economic turmoil, according to UBS. Gold rose 5.5 percent last year, trading at $947.40 today, while crude dropped 54 percent in 2008, reaching $33.94 a barrel today. The dollar traded at $1.2823 per euro after appreciating 4.4 percent last year.

Source www.forexpk.com