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Strategies & Market Trends : New US Economy Policy -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (117)	2/20/1998 5:50:00 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 435

How currency value changed not by host country but by Tokyo, London, Singapore(very small), and US futures markets? News of currency exchange rates around the clock, is a continuation of contract striking prices at different exchanges. They are sometimes not even the same price at all the different markets, depending on the supply and demand of (number of)contracts at the markets at that time. Currency traders stay up to buy and sell or straddle at different markets to scalp a fraction of a dollar for huge profits. Rumors of the economy of a country, whether true or false, can severely change the rates. Banks of far east countries sometimes foolishly gamble their customers' deposits to effect the currency exchange rates. Even central banks sometimes intervene on contracts and striking prices. The foolishness is of course, if you win who is going to pay you. The exchanges have houses that deal with contracts. When you check their capital, you will find that it is never adequate to pay out huge sums. Then how do they survive? By balancing the long and shorts like a bookie. The contract cost is fixed. The amount of currency is fixed. But the striking price is offered by these houses. Whether long or short, the prices are theoretically offered at the pit by auction. But any one big trader can dominate the pit auction. One country's future in currency futures is at the mercy of one big trader. So, China and HongKong decoupled their currency from any mess by traders. Their government fixed the exchange rates by providing ample currency for their citizens to exchange at anytime at a fixed rate. Is there any danger to fixed rate? Only if they run into trade deficits. Export to get extra foreign currency, fixes the exchange rate. Only the local people need to exchange to do business to buy from abroad. Shut down imports and you do not need currency exchange in any country. This all goes back to self-sufficiency. Any problems with Indonesia? They are trade surplus country. Any problems with Indonesia in America? We have many sources of supplies. We do not use Rupees in this country. Currency exchange rates are local Indonesia issue. Fixed currency exchange rates will have no problems, except if imports and exports get out of balance.