Contextualizing the Risks of Money Markets

in Currency Market

Over the years, money market funds have been the safest means of investing some cash for a long term portfolio entry or for those who want a safe place to hold their money. But recent global developments, with the world economy sagging on its knees, experts have started to point out that there are risks in money markets too. This has shed the previous thoughtline that money markets are a risk-free investment avenue. You can no longer hold it for granted that your investment is safe, just because you are in the money markets. In fact, the US Securities and Exchange Commission (SEC) decrees that while investor losses entrusted to money market funds are rare, they are very possible. However, just as they have become risky to an extent, they have also gained on the rate of interests and profits over the last one decade. Contemporary money markets can triple your initial capital within a...

Introduction to The International Monetary Fund

in Currency Market

In a way, the IMF has been successful since it was established back in July, 1944. From its genesis, it has consistently worked to foster optimal global monetary cooperation for the general good of member states. The aim has been to secure the financial stability of world nations and facilitate a mutually benefiting international trade among these nations. This in return could boost both poverty reduction measures and promote high employment. With criticism to the institution considered, the International Monetary Fund has helped instigate a sustainable economic growth in most member states, apart from the third world countries which continue to trade in complete dependence of the international market. The International Monetary Fund (IMF) was a Bretton-Woods brainchild as an international organization that regulated economic policies in member countries that impact on both the...

The EUR / USD Debate in Light of the Current Global Economic Recession

in Currency Market, Forex Trading

The truth of the matter is that the dollar has become considerably weak in recent times. When the Bush administration plunged the US into war in Iraq, a trade deficit was the most immediate outcome. This weakened the dollar to a large extent. The long-term outcome was that many investors switched from the dollar to the Euro. Another outcome of a reduced volume of trade in dollars is the increase in the prices of oil. The US economy is reeling from the effects of a biting recession although no negative growth has been reported. This is very true although the first quarter of a negative trend in growth has not yet been witnessed. Technically, there have to be two quarters of negative growth for a recession to be said to exist. The American mortgage crisis has affected the value of the dollar against the Euro. Many realtors have stopped buying. They are standing by the fence waiting for...

What Really Brings About Currency Crises?

in Currency Market, Hot Currency Exchange

Many investors and international financiers have within the last two decades been caught off-guard by currency crises. Their knee-jerk responses to small economic tremors have always been in the form of capital flight and runs on different currencies. Many people argue that it is such reactions that really cause earth-shaking currency crises. What analysts are sure about is the fact that many investors don’t take time to understand the market dynamics before making their decisions. They rely on their instincts at the expense of the economyĆ­s minutia. A currency crisis is said to have occurred when there is a sharp decline in the value of an economy’s currency. Such a decline creates much instability in areas like exchange rates. In simpler terms, a currency crisis is the result of an interaction of very many factors. One of these factors is investor expectations. Another...