Rank: Veteran Joined: 5/7/2009 Posts: 1,032 Location: Sea of Transquility
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hisah wrote:Quote:Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
One trader with more than a decade of experience said that if he received an order at 3:30 p.m. to sell 1 billion euros ($1.3 billion) in exchange for Swiss francs at the 4 p.m. fix, he would have two objectives: to sell his own euros at the highest price and also to move the rate lower so that at 4 p.m. he could buy the currency from his client at a lower price.
He would profit from the difference between the reference rate and the higher price at which he sold his own euros, he said. A move in the benchmark of 2 basis points, or 0.02 percent, would be worth 200,000 francs ($216,000), he said. Quote:
‘Massive Size’
“I’m skeptical of the ability of traders to manipulate the major currencies in a meaningful way given the massive size of this market,” Naranjo said. “Governments themselves often have a difficult time moving foreign-exchange markets through their interventions, yet they have the additional ability to create fiat money and alter both monetary and fiscal policies.”
IMO manipulation of the fx market is only possible over a narrow range and for a short term period of time. This means that the effect is mostly on short term traders and robots. So if one can alter their strategy to more slightly long term then one can be slightly above the fray. “small step for man”
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