Читать книгу The Foreign Exchange Matrix - Barbara Rockefeller - Страница 5

“There is no sphere of human thought in which it is easier to show superficial cleverness and the appearance of superior wisdom than in discussing questions of currency and exchange.”

Winston Churchill, Speech to the House of Commons, 29 September 1949

The FX market is a mystery to most people, including some of its participants. Pundits on other financial markets and legislators in most countries don’t fully understand it, either. Everyone notes how big the FX market is – bigger than all other global markets combined at $4 trillion per day – but no one ever asks “What is the purpose of all this trading volume?” There are other unanswered questions about FX too.

We also want to know whether FX secretly drives all other markets, or whether it is the passive end-product of all the other markets. Neither assertion is wholly accurate, but knowing that doesn’t help us understand where FX does fit into the grand scheme of things. Further, why do exchange rates always overshoot any reasonable estimate of value, such as comparative purchasing power? Does this mean the FX market is inherently unstable, as financier George Soros has said?

Most of all, FX is money, and money has many different roles. Money is not only how we pay the electric bill (medium of exchange), how we measure economic sustainability (unit of account), and how we measure wealth (store of value), it is also a symbol of a country.

For example, the French were so attached to the now-defunct franc that they continued to hoard as much as €1 billion worth of them, or some 3% of the francs that were in circulation, when the euro was introduced in January 1999. In February 2012, the French government made a windfall gain of about €500 million when the franc finally hit its expiration date. Germany continues to allow the Deutsche Mark to serve as legal tender; the Bundesbank estimates that citizens hold as much as DM 13.2 billion as of end-June 2012. Then think of all the nicknames for the US dollar – such as greenback and buck – and most interesting, food names – including bread, clams and cabbage.

How do the non-functional, reputational aspects of money affect FX trading and, while we’re on that theme, is it justified that the dollar is seemingly in perpetual crisis?

It is possible to provide easy answers to these questions.