FOREX Free Floating Market
FOREX markets officially switched to a free-floating market after the double demise of the Smithsonian Agreement and the European Joint Float. This switch occurred more due to lack of any other available options, but it is important to understand that the free floating of currency was not by any means imposed. This means that countries were free to peg, semi-peg, or free-float their currencies.
FOREX Free Floating Market
FREE-FLOATING CURRENCIES
When the major currencies are free floating, such as the U.S. dollar, they move independently of other currencies. The value of the currency is determined by supply and demand, which has no specific intervention point that has to be observed, and can be traded by anybody so inclined. Free-floating currencies are in the heaviest trading demand.
FOREX Free Floating Market
SEMIPEGGED CURRENCIES
Semipegged currencies have disappeared since 1993. A perfect example of semipegging would be the currencies of the European Monetary System, Those currencies would be allowed to fluctuate only within 2.25% or, exceptionally, within 6% intervention bands. Following the FOREX crisis of 1993, the new European Monetary System intervention rates were expanded to 15 %. Semi-pegging would have a slowing-down effect on currencies when they were reaching the extreme values allowed within the range.
FOREX Free Floating Market
PEGGED CURRENCIES
Some smaller economies have attached their currencies to larger economies with which they hold close economic liaisons. For instance, many Caribbean nations, such as Jamaica, have pegged their currencies to the U.S. dollar.
FOREX Free Floating Market
Profiting from MAJOR FOREX PARTICIPANTS
Major profiting from FOREX participants includes commercial and investment banks and central banks. Other participants include corporations, hedge funds, and millions of traders worldwide. The top 7 banks that provide liquidity in this market include Bank of America, Credit Suisse, First Boston, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Dean Whiner, and UBS Warburg.
As times change and many individual investors begin looking for an alternative to the stock market, the profiting from the FOREX is growing every day, with average daily volumes reaching upwards from $1.5 trillion to 53.5 trillion. Now more than ever, profiting from FOREX will play a key role in the wealth transfer of tomorrow.
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