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<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s <keyword id="19998537" type="General" weightage="20" keywordseo="foreign-exchange-reserves" source="keywords">foreign exchange reserves</keyword> have surged to a record high, reaching a new peak of $ 666.85 billion, according to data from the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>). The data highlights an increase of $9.69 billion in just one week, as of 12 July, surpassing the previous high of $657.2 billion. The reserves have been rising intermittently for some time now. The RBI data reveals that India's <keyword id="20972687" type="General" weightage="20" keywordseo="foreign-currency-assets" source="keywords">foreign currency assets</keyword> (FCA), the largest component of <keyword id="20344433" type="General" weightage="20" keywordseo="forex-reserves" source="keywords">forex reserves</keyword>, rose by $8.3 billion to $585.47 billion. Additionally, <keyword id="19895579" type="General" weightage="20" keywordseo="gold" source="keywords">gold</keyword> reserves increased by $1.2 billion, reaching $58.66 billion. According to a recent RBI report, India's foreign exchange reserves are now sufficient to cover over 11 months of projected imports. In the calendar year 2023, the RBI added approximately $58 billion to its foreign exchange reserves. In contrast, in 2022, India's forex reserves declined by a cumulative $71 billion. Forex reserves, or foreign exchange reserves (FX reserves), are assets held by a nation's central bank or monetary authority, typically in reserve currencies such as the <keyword id="19949640" type="General" weightage="20" keywordseo="us-dollar" source="keywords">US dollar</keyword>, and to a lesser extent, the euro, Japanese yen, and pound sterling. The country's foreign exchange reserves last reached an all-time high in October 2021. Much of the subsequent decline can be attributed to the increased cost of imported goods in 2022. Additionally, the relative fall in forex reserves has been linked to the RBI's market interventions, to manage the uneven depreciation of the rupee against a surging US dollar. The RBI frequently intervenes in the market through liquidity management, including the sale of dollars, to prevent steep depreciation of the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.

India's forex reserves hit record $666.85 billion, driven by surging gold and foreign currency assets

India's <keyword id="20344433" type="General" weightage="20" keywordseo="forex-reserves" source="keywords">forex reserves</keyword> decreased <keyword id="19944038" type="General" weightage="20" keywordseo="USD" source="keywords">USD</keyword> 2.282 billion to USD 640.334 billion for the seven days ended April 19 in the second consecutive week of drop in the kitty, the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) said on Friday. The reserves had dropped USD 5.401 billion to USD 643.162 billion in the previous reporting week, ending a multi-week trend of an increase, which also saw the overall reserves touching a new all-time high of USD USD 648.562 billion for the week ended April 5. In September 2021, the country's forex kitty had reached a high of USD 642.453 billion, which was breached in March this year. The reserves took a hit as the central bank deployed the kitty to defend the <keyword id="19949639" type="General" weightage="20" keywordseo="rupee" source="keywords">rupee</keyword> amid pressures caused majorly by global events, but there had been a steady accretion over the past few months. For the week ended April 19, the <keyword id="20972687" type="General" weightage="20" keywordseo="foreign-currency-assets" source="keywords">foreign currency assets</keyword>, a major component of the reserves, decreased USD 3.793 billion to USD 560.86 billion, according to the data released on Friday. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound, and yen held in the foreign exchange reserves. <keyword id="20344434" type="General" weightage="20" keywordseo="gold-reserves" source="keywords">Gold reserves</keyword> continued to rise and increased USD 1.01 billion to USD 56.808 billion during the week, the RBI said. The Special Drawing Rights (SDRs) were down USD 43 million to USD 18.034 billion, the apex bank said. India's reserve position with the IMF was also down USD 2 million to USD 4.631 billion in the reporting week, the apex bank data showed. SEE ALSO:<a href="https://www.businessinsider.in/business/auto/webstories/ultraviolette-f77-mach-2-electric-sports-bike-launched-in-india-starting-at-2-99-lakh/slidelist/109615934.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/webstories/ultraviolette-f77-mach-2-electric-sports-bike-launched-in-india-starting-at-2-99-lakh/slidelist/109615934.cms" target="_blank">Ultraviolette F77 Mach 2 electric sports bike launched in India starting at ₹2.99 lakh</a><a href="https://www.businessinsider.in/tech/mobile/news/realme-c65-5g-with-5000mah-battery-120hz-display-launched-starting-at-10499/articleshow/109619597.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/news/realme-c65-5g-with-5000mah-battery-120hz-display-launched-starting-at-10499/articleshow/109619597.cms" target="_blank">Realme C65 5G with 5,000mAh battery, 120Hz display launched starting at ₹10,499</a><a href="https://www.businessinsider.in/tech/news/jiocinema-introduces-new-ad-free-premium-plans-starting-at-29/articleshow/109581033.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/news/jiocinema-introduces-new-ad-free-premium-plans-starting-at-29/articleshow/109581033.cms" target="_blank">An Ambani disruption in OTT: At just ₹1 per day, you can now enjoy ad-free content on JioCinema</a>

In second consecutive week of decline, forex kitty drops $2.28 bn to $640.33 bn

<keyword id="495625" type="General" weightage="20" keywordseo="Indias-foreign-exchange-reserves" source="Orion">India's foreign exchange reserves</keyword> fell by $2.164 billion to $584.248 billion for the week ending April 21, according to data released by the Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) on Friday. In the previous reporting week, the overall kitty had risen by $1.657 billion to $586.412 billion. Incidentally in October 2021, the country's forex reserves had reached an all-time high of $645 billion. In the period under review, the reserves fell mainly due to <keyword id="6499383" type="General" weightage="20" keywordseo="foreign-currency-assets" source="Orion">foreign currency assets</keyword> (FCAs) shrinking by $2.146 billion to $514.489 billion. The reserves have been declining as the RBI has used the funds to defend the rupee amid pressures caused mainly by global developments. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/ultratech-cements-q4-net-profit-falls-32-to-1666-crore-declares-dividend/articleshow/99848912.cms">UltraTech Cement’s Q4 net profit falls 32% to ₹1,666 crore, declares dividend</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/upcoming-new-cars-and-suvs-in-india-in-may-2023/slidelist/99842426.cms">Upcoming cars expected to launch in India in May 2023</a>

India's foreign exchange reserves fall to $584.24 billion

<keyword id="495625" type="General" weightage="20" keywordseo="Indias-foreign-exchange-reserves" source="Orion">India's foreign exchange reserves</keyword> fell by $8.3 billion to $566.95 billion in the week ended February 10 -- its biggest weekly fall in 11 months. According to data released by RBI on Friday, the reserves are at their lowest level since January 6, 2023. The fall for the second straight week was mainly due to a decline in the <keyword id="6499383" type="General" weightage="20" keywordseo="foreign-currency-assets" source="Orion">foreign currency assets</keyword>, which dropped $7.1 billion to $500.59 billion. In the week ended February 10, the rupee lost 0.8 per cent to close at 82.51 per dollar as <keyword id="135779" type="General" weightage="20" keywordseo="US-jobs-data" source="Orion">US jobs data</keyword> sparked worries of the Federal Reserve raising interest rates for longer than was earlier anticipated. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/5g-ambulances-act-as-icus-on-bed-says-medical-provider-medulance-who-secured-2-crore-funding-on-shark-tank-india/articleshow/98024547.cms">5G ambulances act as ICUs on bed, says medical provider Medulance who secured ₹2 crore funding on Shark Tank India</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/fiis-pump-in-6000-crore-in-5-sessions-as-emerging-markets-turn-attractive-again/articleshow/98017229.cms">FIIs pump in ₹6,000 crore in 5 sessions as emerging markets turn attractive again</a>

India's forex reserves post biggest weekly fall in 11 months

<keyword id="6358777" type="General" weightage="20" keywordseo="new-delhi" source="Orion">New Delhi</keyword>, Amid speculations on regulation or outright banning of <keyword id="6368079" type="General" weightage="20" keywordseo="crypto-assets" source="Orion">crypto assets</keyword>, Finance Minister <keyword id="129243" type="General" weightage="100" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> on Saturday said that that <keyword id="42981" type="General" weightage="20" keywordseo="g20" source="Orion">G20</keyword> will take call on it. "I don't want to get into the debate just now whether crypto will be regulated or banned. The G20 will take a call on that," she said when asked about the move to deal with it. "G20 countries have signed an agreement to collectively work to boost world bank's financing capacity. The G20 welcomed the IMF-FSB (Financial Stability Board) crypto synthesis paper, including the roadmap, that will support a coordinated and comprehensive policy and regulatory framework," she said. The Finance Minister was addressing a press conference along with Foreign Minister S Jaishankar and G20 Sherpa Amitabh Kant on the sidelines of the G20 summit. She said that FSB has focussed more on the crypto regulations, whereas IMF has emphasised on the macroeconomic implications of crypto assets. "The synthesis paper is something which the G20 membership will go through in detail. There's one more meeting, under our presidency for the finance track, in Marrakesh," <keyword id="679937" type="General" weightage="80" keywordseo="sitharaman" source="Orion">Sitharaman</keyword> said. G20 leaders have agreed to the discussions on the adoption of <keyword id="10038048" type="General" weightage="80" keywordseo="central-bank-digital-currencies" source="Orion">Central Bank Digital Currencies</keyword> (CBDCs), said the discussion paper on September 9. "We welcome discussions on the potential macro-financial implications arising from the introduction and adoption of Central Bank Digital Currencies (CBDCs), notably on cross-border payments as well as on the international monetary and financial system," said the G20 discussion paper. The G20 discussion paper further added that they welcome the BIS Innovation Hub (BISIH) Report on Lessons Learnt on CBDCs. "Look forward to the IMF Report on Potential macro-financial implications of widespread adoption of CBDCs to advance the discussion on this issue," said the G20 discussion paper. SEE ALSO:<a href="https://www.businessinsider.in/politics/india/news/g20-leaders-summit-adopts-new-delhi-declaration/articleshow/103535369.cms" target="_blank"></a> <a href="https://www.businessinsider.in/politics/india/news/g20-leaders-summit-adopts-new-delhi-declaration/articleshow/103535369.cms" target="_blank">G20 Leaders Summit adopts New Delhi Declaration</a><a href="https://www.businessinsider.in/politics/india/news/g20-summit-pm-modi-announces-launch-of-global-biofuel-alliance/articleshow/103535675.cms" target="_blank"></a> <a href="https://www.businessinsider.in/politics/india/news/g20-summit-pm-modi-announces-launch-of-global-biofuel-alliance/articleshow/103535675.cms" target="_blank">G20 Summit: PM Modi announces launch of Global Biofuel Alliance</a><a href="https://www.businessinsider.in/entertainment/webstories/from-dream-girl-2-to-tootsie-epic-roles-which-saw-male-actors-crossdress/slidelist/103525812.cms" target="_blank"></a> <a href="https://www.businessinsider.in/entertainment/webstories/from-dream-girl-2-to-tootsie-epic-roles-which-saw-male-actors-crossdress/slidelist/103525812.cms" target="_blank">From Dream Girl 2 to Tootsie – Epic roles which saw male actors crossdress</a>

G20 to take call on crypto assets, says Nirmala Sitharaman

<ul class="summary-list"><li>Russia is pushing ahead in its drive to de-dollarize its economy, Putin said.</li><li>The Russian president said the use of "toxic" currencies had been slashed in half.</li></ul>Russia is forging ahead with plans to phase out the US dollar, with President Vladimir Putin calling the nation to reduce its use of "toxic" currencies.Speaking at the St. Petersburg International Economic Forum this week, the Russian president pointed to the country's declining use of Western currencies. The ruble is being utilized more in trade transactions, he added, despite the <a target="_blank" href="https://www.businessinsider.com/russia-economy-weak-ruble-hurts-central-asians-migrant-workers-currency-2023-8#:~:text=The%20ruble%20has%20fallen%20so,at%20the%20start%20of%202023.">currency plunging in value in late 2023</a>."Last year, the share of payments for Russian exports in the so-called 'toxic' currencies of unfriendly states halved, while the share of the ruble in export and import transactions is growing — it is approaching 40% today," Putin said at the event, per a report from Reuters. "We will increase the use of national currencies in foreign trade settlements, improve the security and efficiency of such operations, including through BRICS."Russia will continue to ramp its use of <a target="_blank" href="https://www.businessinsider.com/dedollarization-brics-usd-dollar-central-banks-digital-currency-payments-mbridge-2024-5">BRICS currencies for trade</a>, Putin added. He also introduced a handful of ambitious economic goals for Russia to meet by 2030, which included reducing imports from other countries, raising investment in fixed assets by 60%, and doubling the value of <a target="_blank" href="https://markets.businessinsider.com/news/stocks/russia-economy-stock-market-putin-ukraine-war-moscow-investment-sanctions-2023-8">Russia's stock market</a>.Russia has been shifting away from the dollar since 2022, after it began its invasion of Ukraine and was subsequently hit with Western sanctions.Putin has rebuffed many of those trade restrictions, calling key measures, like a price cap on Russian oil, "<a target="_blank" href="https://markets.businessinsider.com/news/commodities/vladimir-putin-russian-oil-price-cap-eu-ban-production-cut-2022-12">stupid</a>," but Russia's economy is struggling to get by as it grows <a target="_blank" href="https://www.businessinsider.com/russia-economy-ukraine-war-putin-moscow-budget-isolation-west-sanctions-2023-12">increasingly isolated</a> from global markets, experts have said.Meanwhile, economists say there's no threat to the dollar from these efforts, and it won't be <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5#:~:text=The%20dollar's%20status%20as%20the,and%20most%20widely%20used%20currency.">displaced as the world's dominant currency</a> anytime soon, even as more nations express a desire to move away from the currency. The greenback has remained the top-used currency in global trade and in central bank reserves for decades. <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5#:~:text=The%20dollar's%20status%20as%20the,and%20most%20widely%20used%20currency.">Currency experts note that it would take years </a>to move away from the dollar, given its status as a safe-haven asset.

Russia is doubling down on its de-dollarization efforts as Putin calls to reduce use of 'toxic' currencies

New Delhi [<keyword id="19895063" type="General" weightage="100" keywordseo="India" source="keywords">India</keyword>], May 19 (ANI): India's <keyword id="19998537" type="General" weightage="20" keywordseo="foreign-exchange-reserves" source="keywords">foreign exchange reserves</keyword> rose for the second straight week, by <keyword id="19944038" type="General" weightage="20" keywordseo="USD" source="keywords">USD</keyword> 2.561 billion to USD 644.151 billion in the week that ended on May 10, according to data shared by the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>). Preceding these two weeks, the forex kitty had seen three consecutive weeks of decline. The country's foreign exchange reserves had hit an all-time high of USD 648.562 billion recently. According to the latest data released by the Reserve Bank of India (RBI), India's foreign currency assets (FCA), the biggest component of the forex reserves, rose by USD 1.488 billion to USD 565.648 billion. <keyword id="20344434" type="General" weightage="20" keywordseo="gold-reserves" source="keywords">Gold reserves</keyword> during the week rose by USD 1.072 billion to USD 55.952 billion. India's foreign exchange reserves, which had reached an all-time high are sufficient to cover 11 months of projected <keyword id="19933566" type="General" weightage="20" keywordseo="imports" source="keywords">imports</keyword>, according to the Monthly Economic Review report of the Department of Economic Affairs under the Ministry of Finance, released lately. In the calendar year 2023, the RBI added about USD 58 billion to its foreign exchange kitty. In 2022, India's forex kitty slumped by USD 71 billion cumulatively. Foreign exchange reserves have risen about USD 23 billion, on a cumulative basis, in 2024 so far. Forex reserves, or foreign exchange reserves (FX reserves), are assets that are held by a nation's central bank or monetary authority. It is generally held in reserve currencies, usually the US Dollar and, to a lesser degree, the Euro, Japanese Yen, and Pound Sterling. The country's foreign exchange reserves last touched their all-time high in October 2021. Much of the decline after that can be attributed to a rise in the cost of imported goods in 2022. Also, the relative fall in forex reserves could be linked to the RBI's intervention, from time to time, in the market to defend the uneven depreciation in the rupee against a surging US dollar. Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the sale of dollars, to prevent a steep depreciation in the rupee. The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.

India's foreign exchange reserves rose by USD 2.6 billion in the week ending May 10: RBI

The <keyword id="19949639" type="General" weightage="20" keywordseo="rupee" source="keywords">rupee</keyword> stayed range-bound and settled 4 paise lower at 83.50 (provisional) against the <keyword id="19949640" type="General" weightage="20" keywordseo="US-dollar" source="keywords">US dollar</keyword> on Thursday, weighed down by unabated foreign fund outflows amid investors' weak appetite for riskier assets. However, a firm trend in domestic equities supported the local unit and restricted its losses, <keyword id="20024982" type="General" weightage="20" keywordseo="forex-traders" source="keywords">forex traders</keyword> said. The rupee remains under pressure due to ongoing elections and foreign fund outflows, and the same shall subside once the results are out, they added. At the interbank foreign exchange market, the local unit traded in a narrow range. It opened at 83.45 and touched an intraday high of 83.44 and a low of 83.50. The domestic unit finally settled for the day at 83.50 (provisional), down 4 paise from its previous close. On Wednesday, the rupee had settled at 83.46 against the US dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 104.40, higher by 0.06 per cent. Brent crude futures, the global oil benchmark, fell 0.33 per cent to USD 82.48 per barrel. Oil price has corrected substantially following a surge to USD 93 per barrel and is currently hovering around USD 82 per barrel. This decline in oil prices is set to have a beneficial effect on India's trade balance, especially considering that petroleum products make up 25 per cent of its total import spending, according to experts. The reduced oil prices are anticipated to ease the strain on the trade deficit, providing a more positive outlook for the rupee. On the domestic equity market, the 30-share <keyword id="19950208" type="General" weightage="20" keywordseo="BSE-Sensex" source="keywords">BSE Sensex</keyword> advanced 676.69 points, or 0.93 per cent, to close at 73,663.72 points. The broader <keyword id="19950205" type="General" weightage="20" keywordseo="NSE-Nifty" source="keywords">NSE Nifty</keyword> settled 203.30 points or 0.92 per cent higher at 22,403.85 points. <keyword id="19932515" type="General" weightage="20" keywordseo="foreign-institutional-investors" source="keywords">Foreign Institutional Investors</keyword> (FIIs) were net sellers in the capital markets on Wednesday, as they offloaded shares worth Rs 2,832.83 crore, according to exchange data.

Rupee settles 4 paise lower at 83.50 against US dollar

Table of Contents: Masthead Sticky<ul class="summary-list"><li><keyword id="6358355" type="UNKNOWN" weightage="60" keywordseo="forex" source="Orion">Forex</keyword> is a global marketplace for trading one currency for another.</li><li>Central banks are also involved in the forex market, buying and selling currencies in order to push the value of their native currency either higher or lower.</li><li>The forex <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> offer investors liquidity and 24/7 trading - but they're highly volatile.</li></ul>If you've already begun your investing journey, the <keyword id="11895235" type="UNKNOWN" weightage="60" keywordseo="stock-market" source="Orion">stock market</keyword> is a familiar place. But if you're looking to expand your portfolio and see how else you can strengthen your portfolio, there's foreign exchange, or forex.Forex involves trading one currency for another. For example, a person could exchange the US dollar for the Japanese Yen. Forex offers deep liquidity and 24/7 trading, so investors have ample opportunities to get involved. <h2>Understanding forex </h2>The forex market is a global electronic network of banks, brokers, hedge funds, and other traders. This market is where one currency is traded against the other in an effort to turn a profit. Central banks are also involved in the forex market, where they're responsible for maintaining the value of their countries' currency. This value is represented as the exchange rate by which it will trade on the open market. Market participants can trade in the spot market and also buy and sell <a href="https://www.businessinsider.com/derivative" target="_blank" rel="noopener">derivatives</a>. As a result, they can trade <a href="https://www.businessinsider.com/what-are-futures" target="_blank" rel="noopener">futures</a>, forwards, and swaps.Quick tip: The spot market is a financial market where investors can trade currencies, commodities, and securities instantly.Investors trade forex in pairs, which list the base currency first and the quote currency second. For example, if someone trades the JPY/USD, the Japanese Yen is the base currency, and the US dollar is the quote currency.<div type="image" title="Forex pricing: Base and Quote currency example using JPY and USD" height="774" width="1668" msid="86630168" hostid="261"></div>Investors who are interested in forex have the ability to trade several different currency pairs: major pairs, minor pairs, exotic pairs, and regional pairs. <ul><li>The major pairs involve the US dollar, and include USD/JPY, EUR/USD, USD/CHF, and EUR/USD. These four currency pairs account for 80% - a strong majority - of forex trading, according to figures provided by <a href="https://www.ig.com/us/forex/what-is-forex-and-how-does-it-work" target="_blank" rel="noopener">IG</a>. </li><li>The minor pairs, which consist of other major currencies, include GBP/JPY, EUR/GBP, and EUR/CHF. </li><li>There are exotic pairs, which involve a major currency combined with a minor currency, such as EUR/CZK, USD/PLN, and GBP/MXN. </li><li>Then there are regional pairs, which are named for different geographic regions, for example Australasia or Scandinavia. AUD/SGD, EUR/NOK, and AUD/NZD all count as regional pairs. </li></ul>The world's most-traded currency, by far, is the US dollar; it experiences more than $5 trillion worth of trading volume per day, according to <a href="https://stats.bis.org/statx/srs/table/d11.3" target="_blank" rel="noopener">figures</a> from the Bank for International Settlement (BIS). The data from BIS also reveals the Euro as a not-so-close second, with more than $2.1 trillion in daily trading volume, and the Japanese Yen and pound sterling are the third- and fourth-largest currencies by average daily trading volume, at $1.1 trillion and $844 billion, respectively. <h3>The forex market </h3>This global market has two tiers: the interbank market and the <a href="https://www.businessinsider.com/what-is-otc" target="_blank" rel="noopener">over-the-counter (OTC) market</a>. The interbank market involves institutions that exchange currencies with each other and have the ability to set exchange rates because of the magnitude of their trades. The OTC market is different in that it involves transactions that are made electronically instead of going through a third party like a broker or exchange. <h2>The origins of forex</h2>Different narratives have been provided as to when the forex markets first originated. Some have asserted that forex existed thousands of years ago. The barter system, in which people would trade goods for other goods, first <a href="https://www.dailyfx.com/education/beginner/history-of-forex.html" target="_blank" rel="noopener">came into existence</a> during the time of Mesopotamia tribes. As this system progressed, merchants would travel between different regions on ships in order to trade goods like spices and salt for other items, creating the first foreign exchange. <h2>How forex trading works</h2>Forex trading involves trading currency pairs in an effort to hedge or speculate. For retail investors, the process of forex trading involves opening a <a href="https://www.businessinsider.com/what-is-a-brokerage-account" target="_blank" rel="noopener">brokerage account</a>, funding it, and then trading. Once set up, if an investor thinks that the US dollar will rise compared to the Japanese Yen, they could buy the US dollar and sell the Yen. However, if that same investor thinks the Euro will decline relative to the US dollar, they can sell the EUR/USD by opening a sell position for one lot of that pair. Either way, if their bet is accurate, they will make a profit. However, if their prediction isn't accurate, they will suffer a loss. Investors trade currencies in lots, which are simply the number of units of those currencies. There are standard, mini, micro, and nano lots, which consist of 100,000, 10,000, 1,000, and 100 currency units, respectively. Traders frequently aim to capitalize on small fluctuations in exchange rates, which are measured in pips, which represent one one-hundredth of 1 percentage point. Note: Some forex traders use the term "greenback," which is a slang term that refers to the US dollar.<a href="https://www.businessinsider.com/hedge-fund" target="_blank" rel="noopener">Hedge funds</a> also use brokers. "[They] generally use institutional brokers, but they often also use the same brokers as retail investors - although they will almost always negotiate volume discounts/better terms," says Tim Enneking, managing director of hedge fund manager <a href="https://www.digital-capital-management.com/" target="_blank" rel="noopener">Digital Capital Management</a>. Quick tip: Banks trade significant amounts of currencies through the interbank market. These financial institutions make transactions that are frequently worth between $10 million and $100 million. Banks have currency desks, which communicate with each other constantly, and this helps them to ensure that exchange rates are consistent. <h3>The pros and cons of forex trading</h3>Forex offers many pros, including deep liquidity, 24-hour-a-day access, and access to <a href="https://www.businessinsider.com/leverage" target="_blank" rel="noopener">leverage</a>, which can help provide stronger returns. Further, some forex brokers advertise themselves as offering no-commission trading. Another major draw of trading forex is the small amount of capital a person needs to get started. "You can easily trade using leverage which means that you need relatively little capital to be able to trade forex," says Julius de Kempenaer, senior technical analyst at <a href="https://stockcharts.com/" target="_blank" rel="noopener">StockCharts.com</a>."It is no problem to day trade or scalp as the forex market is a lot less regulated than the stock/bond market." Scalping refers to making trades that profit from small changes in the value of forex pairs.But there are drawbacks as well - such as leverage, which can be a double-edged sword in that it can amplify both gains and losses. Further, Enneking notes that the forex market has low <a href="https://www.businessinsider.com/what-is-volatility" target="_blank" rel="noopener">volatility</a>. "Without leverage, it's a difficult market to make real money in," Enneking says. Retail traders can face substantial risks because of easy access to leverage and lack of understanding of how it all works.<h3>Forex example </h3>One currency pair a person might want to trade is the EUR/USD. If this particular pair is trading for 1.15 pips, and they think the exchange rate will increase in value, they could purchase 100,000 Euros worth of this currency pair. If it goes up to, for example, 1.20, they would experience a gain. You could use the following equation to calculate your profit: €100,000 x (1.2000-1.1500) = $5,000After that, they could take determine their profit in euros using this formula: $5,000/1.20 = €4,166.67<h2>The financial takeaway</h2>The forex market provides ample opportunities for traders, allowing them significant access to leverage, the ability to trade 24/7, and the possibility of getting started with a small capital outlay. There are plenty of online brokers they can use, providing them with a wealth of options. However, they should keep in mind that while there is the potential for gains, there are also significant risks involved. For starters, leverage can amplify losses, and many retail traders who want to take part will find themselves competing with professional traders working for financial institutions. "Neophytes have their work cut out for them," says Enneking. "There are a plethora of long-time, highly skilled, very knowledgeable players in the space. You have a long learning curve to climb to feel comfortable and become successful in the sector."<a data-type="60ff29d5286456579a35d093">Beta can help you determine how much your portfolio will swing when the market moves</a><a data-type="606c79d8fce00e68545ceee6">5 common behavioral biases and how they lead investors to make bad decisions</a><a data-type="6143817b5b926a5dd93d7aa5">Purchase power is a measure of what your money can buy - here's how it can impact your finances</a><a data-type="5fc809a6f45c2344c12b9ab6">Trading and investing are two approaches to playing the stock market that bring their own benefits and risks</a>

What is Forex? Understanding the market for exchanging foreign currencies

<ul class="summary-list"><li>China is pushing global use of the yuan to reduce the impact of potential Western sanctions.</li><li>It aims to guard against sanctions in scenarios such as military conflict over Taiwan, a researcher says.</li></ul>China is on a drive to expand the use of the yuan internationally, but a researcher says Beijing's near-term intent is more about protecting against sanctions than currency dominance."China's strategies to develop an alternative financial system are defensive rather than offensive — at least for now," Zoe Liu, a fellow for China studies at the Council on Foreign Relations, wrote on Wednesday.Liu wrote that Beijing's goal was to minimize any impact of potential sweeping sanctions from the West in "extreme geopolitical scenarios such as a military conflict over Taiwan," which China claims as its territory. Her post was published on the website of the <a target="_blank" href="https://www.omfif.org/2024/05/china-is-defending-against-the-dollars-dominance/">Official Monetary and Financial Institutions Forum</a>, a London think tank."Expanding the use of the renminbi in trade is less challenging than increasing its status as an international reserve currency," Liu wrote.Countries around the world have been diversifying their assets and chipping away at the <a target="_blank" href="https://markets.businessinsider.com/news/commodities/de-dollarization-reasons-why-countries-move-away-us-dollar-2023-7">dominance of the US dollar</a> over fears that — like Russia — they could be shut out of the world's greenback-based financial system should sanctions hit.However, king dollar is so entrenched in the world's financial system that <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5">few really think it can be dethroned</a>.<h2 id="71b9e03e-c30c-46c3-bd77-d241d79322dc">The yuan faces challenges in its globalization</h2>While the US and China's strategic competition points to a possible race for currency supremacy, the Chinese yuan is far from ready — and even <a target="_blank" href="https://markets.businessinsider.com/news/currencies/dedollarization-china-yuan-complete-break-from-the-usd-2023-5">Beijing knows that</a>.An often-cited hurdle to the yuan's internationalization is <a target="_blank" href="https://www.centralbanking.com/central-banks/currency/7860946/chinas-capital-controls-here-to-stay">China's use of capital controls</a> to maintain financial stability. This means Beijing has control over how much foreign money can move in and out of China's economy, which in turn influences the foreign-currency exchange rate.But Liu wrote that capital controls weren't necessarily a dealbreaker for the broader adoption of the yuan in trade."China is already a top trading partner for over 120 countries, and the Chinese government is willing to facilitate exports by offering currency swaps and providing trade finance," she explained.But the yuan's path to becoming an international reserve currency is fraught with obstacles because of other factors. The factors listed by Liu include the lack of risk-free yuan-denominated assets, the somewhat closed nature of the Chinese financial market, and the preference of China's leader, Xi Jinping, for <a target="_blank" href="https://www.businessinsider.com/how-xi-putin-parallel-paths-to-become-life-rulers-2024-3">one-man rule</a> rather than the rule of law.<h2 id="8ebb2e73-98a2-44e9-ae1d-437c65dcfe9b">Businesses have reservations about using the yuan</h2>Recent data from China's central bank shows that even <a target="_blank" href="https://www.businessinsider.com/dedollarization-china-businesses-hoarding-us-dollars-fx-earnings-yuan-renminbi-2024-4">Chinese businesses aren't that sold on the yuan</a>, as they hold back on converting their foreign-exchange earnings into the Chinese currency.This appears to be primarily because of the yuan's current weakness. It also shows that it's not so easy to displace the mighty US dollar as the world's top reserve and trading currency of choice.A <a target="_blank" href="https://www.udfspace.com/article/5475693196063148.html">recent global survey</a> of about 1,660 enterprises showed that there just wasn't enough interest in <a target="_blank" href="https://www.scmp.com/economy/economic-indicators/article/3264441/chinas-yuan-strategy-not-paying-trade-partners-survey-finds-policy-and-market-risks-are">using the yuan to trade</a>.Conducted in March by China's Bank of Communications and Renmin University, about three-quarters of the survey's respondents were in East Asia. Another fifth of respondents were in Southeast and Central Asia.Half of the companies surveyed said the main stumbling block to wider use of the yuan was simply because their trading partners weren't willing to use the currency.About 64% of all respondents said complex policies were the main obstacle, and more than 40% cited the compatibility of laws and regulations and barriers to capital flow as major difficulties.

China's quest to turn the yuan into a global currency isn't actually driven by domination. It's about sanctions.

<ul class="summary-list"><li>Russia accused the West on Monday of stealing from its currency and gold reserves. </li><li>Western sanctions have frozen $640 billion worth of Russian assets. </li></ul>Russia accused the West of stealing from Moscow's currency and gold reserves on Monday thanks to sanctions that froze Russian assets. In a statement to reporters discussing the prospect of the European Union's proposal to transfer the frozen Russian assets to Ukraine, spokesperson Dmitry Peskov said "a part large of our assets have been essentially stolen by specific Western countries."The Western sanctions have blocked Russian access to roughly $640 billion worth cash and gold reserves in response to the Kremlin's February 24 invasion of Ukraine. Other US allies followed suit earlier this year, freezing $30 billion worth of assets held by Russian oligarchs in concert with $300 billion in Russian central bank funds. The European Union is also considering transferring the Russian cash and gold to Ukraine, drawing criticism from the Kremlin.

Russia says the West has 'essentially stolen' its foreign currency and gold reserves as the EU eyes asset transfer to Ukraine

<ul class="summary-list"><li>China has more foreign exchange reserves than reported, a former Treasury official wrote.</li><li>An additional $3 trillion is hidden in "shadow reserves," such as state commercial and policy banks. </li></ul>Half of China's currency reserves are "hidden," a situation that may add risks to the global economy down the road, former Treasury Department official Brad Setser wrote.While the country's State Administration of Foreign Exchange reported $3.12 trillion in foreign assets last December, Setser estimates that foreign exchange reserves actually sit at around $6 trillion."China is so big that how it manages its economy and currency matters enormously to the world," he wrote in <a href="https://thechinaproject.com/2023/06/29/shadow-reserves-how-china-hides-trillions-of-dollars-of-hard-currency/" target="_blank" rel="noopener">The China Project</a>. "Yet over time the way it manages its currency and its foreign exchange reserves has become much less transparent – creating new kinds of risks for the global economy."A key indicator about China's reserves is a sudden pause in its reported activity. From 2002 to 2012, China's foreign exchange reserves steadily rose as the central bank bought US dollar assets to prevent China's yuan from appreciating too much, allowing exports to remain cheap.But over the last 10 years, China's reserves stopped rising, which is puzzling as China's trade surplus has continued growing, and currently stands at an all-time high, he said. Setser, who previously was deputy assistant Treasury secretary for international economic analysis and is now senior fellow for international economics at the Council on Foreign Relations, has an idea of what's going on."Just as China has 'shadow banks' — financial institutions that act like banks and take the kind of risks that a bank might normally take but aren't regulated like banks — China has might be called 'shadow reserves.' Not everything that China does in the market now shows up in the PBoC's balance sheet," he said.China's state banking system is the main way Beijing hides its reserves, Setser said. That includes state commercial lenders like the Bank of China, Industrial &amp; Commercial Bank of China or ICBC, China Construction Bank, and the Agricultural Bank of China as well as policy banks like the China Development Bank and the Export-Import Bank of China.China's State Administration of Foreign Exchange did not immediately respond to Insider's request for comment.The vast amount of China's reserves carries enormous weight in financial markets and represents a risk.For example, Setser said China's earlier accumulation of US Treasurys and agency bonds — such as Freddie Mac and Fannie Mae securities — helped give rise to the 2008 financial crisis, by pushing investors further into riskier mortgage-backed securities."China's lack of transparency here is a bit of a problem for the world," he said. "China structurally is so central to the global economy that anything it does, seen or unseen, will eventually have an enormous impact on the rest of the world."

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