victor8forextrad's Blog

A. The quickest measure is to sell dollars on the currency markets, a practice known as intervention. Dumping big amounts of any product on a market usually depresses its price, and the dollar is no exception. Even the threat of such dumping can have a depressing effect. Q, What other steps are there? A. On a much longer-term basis, countries can try to change their economies and their trade practices. These, along with market psychology, are the fundamental factors that determine the relative values of currencies. Q. Does intervention work? A. Traders often scoff at intervention - until they get a call from the Federal Reserve or another central bank that wants to sell $100 million. Heavy intervention almost always causes an immediate drop in the exchange rate, partly because traders often scramble to unload their own dollars at the first sign of such a move. They do not want to be left with dollars if the exchange rate drops. A. Although sudden, massive intervention can cause a run on a currency, everyone knows the amounts countries spend to intervene is going to be small compared to the total amounts being traded. This week, for example, central banks appear to have sold an average of $1 billion or less a day. That compares to perhaps $150 billion in foreign currency trading that takes place around the world on an average day. So intervention depends more on psychology than on directly changing the supply and demand of dollars. A. That is exactly what skeptics say. They acknowledge that intervention can cause a sharp drop in the dollar on any given day, but they say that the market can simply bid the dollar up the next week, if traders think that is where the dollar belongs. They also note that central banks cannot perpetually intervene heavily in currency markets, for they would run out of reserves. Britain, for example, has only about $10 billion in foreign currency holdings, which the market could digest in a day or two.

Full text: New York Times, Sep 27, 1985

forex trading system

WASHINGTON - The U.S. trade deficit grew by a relatively modest $10.7-billion in December, according to a Department of Commerce preliminary report Friday. However, the estimated trade gap for all of last year still was a record $169.8-billion. The unexpectedly sharp drop from the $19.2-billion preliminary deficit figure for the previous month helped push the value of the dollar up strongly in currency trading, easing fears of a free fall. The trade figures, marking the narrowest monthly gap between imports and exports since March 1985, also suggested to analysts a possible boost for an economy that has been suffering from a ballooning trade deficit.

Full text: St. Petersburg Times, Jan 31, 1987

forex trading system

In London, gold fell $6.50 a troy ounce from Friday levels to $425 and in Zurich it fell $5.50 an ounce to $426. Earlier in Hong Kong gold was down about 15 cents to $430.19. Later in New York gold recovered the loss, and by 4 p.m. Republic National Bank of New York quoted gold at $430.50 a troy ounce, up from $429.50 Friday. On the New York Commodity Exchange, gold bullion for current delivery was quoted at $430.50 an ounce, up 90 cents. In currency trading, the dollar fell in Tokyo to 128.12 Japanese yen from 128.35 yen at the close Friday. In New York, the dollar was quoted at 128.24 yen, down from 128.37 yen late Friday. Live cattle settled .40 cent to 1.12 cents lower with the contract for delivery in April at 71.50 cents a pound; feeder cattle were .45 cent higher to 1.27 cents lower with March at 79.75 cents a pound; live hogs were .05 cent higher to 1.07 cents lower with April at 43.25 cents a pound, and frozen pork bellies were .25 cent to .63 cent higher with March at 51.85 cents a pound.

Full text: Chicago Sun - Times, Mar 1, 1988

forex trading system

On Friday, currency traders in Denver were offering travelers 135.75 Japanese yen for a dollar, up from 128 yen in early May. The increase translated into an average 6 percent more value for each dollar spent in Japan since May 5 and a 12 percent gain since January, based on rates quoted by the Denver branch of Deak International Ltd., a currency trading and precious metals firm. While the June 2 exchange rate for the German Mark was 1.98 marks to the dollar, as listed in The Denver Post, the average number of marks an individual could have received for a dollar was 1.91 marks through banks or currency traders like Deak International.

Full text: Denver Post (pre-1997 Fulltext), Jun 5, 1989

forex trading system

The economy is on track for growth of close on 3% for the year. Strong domestic activity is helping to cushion the economy from the effects of the international slowdown.

Full text: Oxford Analytica Daily Brief Service, Dec 04, 1990

forex trading system