I've just noticed the aussie dollar has fallen 10% to the PLN (polish zloty) and similairy to the euro over the past 3-4 weeks. Got me a bit worried so I read up any news I could find and its said it could fall another 7% over the next few months because of falling commodity prices ...

Is this for real? Just not sure what to do with some of the cash I have in Aus banks

the euro is dominating!

record highs against GBP & USD at the moment, I just sent some cash home from here @ 1.72 - I'll be home for 2 weeks in April and I can't wait to go shopping with phat Euro's in my back pocket :D

LOL every time there's movement people post on here asking what to do. Obviously the answer is, don't panic, NOBODY KNOWS FOR SURE. You can predict as much as you want and sure a lot of people will be correct, but you don't know who they will be or in what direction they predict. If you want to invest and get scared every time there's movement then maybe you should play a different game;)

SELL SELL SELL

BUY BUY BUY

GIVE TO ME GIVE TO ME GIVE TO ME

SELL THEN BUY THEN BUY THEN SELL! It's the only way.

BUY AND SELL AT THE SAME TIME

BUY SELL EAT SLEEP!

MADNESS!

infidel the long term average for the AUD is around .75 to the USD - so bear in mind it has been higher than average for a while now.

but billy's right, currency is stupidly volatile.

zlotys are so hot right now

GIVE ME 1000 HAPPY BURRITO STOCKS NOW!!

Currency trading, worse odds then all on red.

haha you all voted for Rudd

not even 'iceberg tip' could have saved us

oh its not currency trading ... I want to buy a car soon and I just lost 10% of the cash I had sitting in my CBA account which sucks. I'm just asking here in case anyoen knows more than the 'news.com.au' reading i did :*(

forgot to mention why the zlotys? I'm in Pooland right now ...

last edited by Le Infidel at 18:05:23 30/Mar/08

Martz .. your suggestion is silly at several levels.

Firstly Dollar the going down is not actually a bad thing it makes our exports more attractive and imports less so. Something that might help with scarily bad current account balance (a 2.7something billion dollar gap in the Dec 07 quarter ?). At a personal level, its bad for Aussie about to go on holidays, great for Aussies currently working over there.

Secondly are you suggesting the Howard government left the Australian economy in such a fragile state that it splitting at the seems (which it isn't) prior to a Labor government even handing down their first budget ?

ps. yay for derails

Something that might help with scarily bad current account balance

and why are current account balances bad, obes?

edit: also do you honestly think that banks/insurance companies, some of the most arguably risk aware institutions, would participate in currency trading if it had a negative expected value?

last edited by taggs at 19:47:30 30/Mar/08

CAD's matter not one iota to anything. they float with the performance of a country's economy and the recent climb in the $A means that despite our CAD other countries find our currency and our exports appealing.

and why are current account balances bad, obes?

"Sovereign funds"

also do you honestly think that banks/insurance companies, some of the most arguably risk aware institutions, would participate in currency trading if it had a negative expected value?

Yes I do. Surely you aren't suggesting currency tradding is some investment utopia ?
Banks have lost money in this exact game.
2004/2005 NAB what was it 1 or 2 billion dollars ?
Allied Irish Bank lost how much ?

Currency trading is a 0 sum game. For you to win, someone else must lose. But you have brokers taking a slices (they win no matter who loses, think of them as the house or the dealer). Its basically a massive poker table. And you are a small stack.
Whether you win or lose is determined by huge banks trading more money in a day then I will see in a life time. Its driven by speculation and rumour, as much as anything real.

ok well I guess this polish zloty has been getting stronger over hte past 5 years so might as well just transfer it all here :S 10% drop in the past 4 weeks was just too much and my own fault for not watching it I guess till yesterday

last edited by Le Infidel at 21:13:37 30/Mar/08

"Sovereign funds"

want to explain that a little further?

current account deficts (or surpluses) are the residual result of private savings and investments decisions in an economy. as long as they don't affect underlying macroeconomic variables they are perfectly natural and even desirable.

Yes I do. Surely you aren't suggesting currency tradding is some investment utopia ?

surely you wouldn't create a straw man argument? where did i ever say anything like that?

Banks have lost money in this exact game.
2004/2005 NAB what was it 1 or 2 billion dollars ?
Allied Irish Bank lost how much ?

and banks have made absolute f***tons of money in it too. you've probably just never read about that. those cases you've listed have involved fraud, rogue traders or both. if you have employees not following company instructions or breaking the law you can lose money doing anything.

Currency trading is a 0 sum game. For you to win, someone else must lose. But you have brokers taking a slices (they win no matter who loses, think of them as the house or the dealer). Its basically a massive poker table.

you do realise that there are a very large number of players in the currency markets who aren't seeking profits, such as central banks manipulating variables, companies/people hedging currency risk, conversions, etc. there are always plenty of players in the currency market who are happy to lose money because they are persuing other objectives. your poker analogy is worthless because it gives the impression that every participant in the currency market is profit seeking, which is far from the case.

there's research in finance circles showing this quite clearly, it can even be argued that the profit seeking investor has an inherent advantage in the currenct market for exactly that reason.

And you are a small stack.

huh? no one here is talking about individuals investing in currency markets, we're talking about institutions. whom by the way don't pay much (or any) brokerage fees relative to the amounts they are trading.

Its driven by speculation and rumour, as much as anything real.

saying it's driven by speculation and rumor is a pretty big call, though i'll concede that it is pretty stongly influenced by them. but perhaps you could point out a market that isn't?

no one here is arguing that currency trading isn't risky. it's risky as hell, but it has a also has a very high return.

high return yes, a drop of 10% in 4 weeks would be nice if i had a time machine

Currency trading is a 0 sum game. For you to win, someone else must lose. But you have brokers taking a slices (they win no matter who loses, think of them as the house or the dealer). Its basically a massive poker table. And you are a small stack.
Whether you win or lose is determined by huge banks trading more money in a day then I will see in a life time. Its driven by speculation and rumour, as much as anything real.

currency trading is not zero sum and most certainly produces value. tell me currency trading is useless next time you try and convert AUD to EUROS. without currency trading holidaying would be next to impossible for most people. without currency trading it would be very difficult for firms to invest in other countries. this value created by currency trading is partially captured by the consumers and partially captured by those that facilitate currency trading.

Why all the talk about polish zloty??? and what you doing in poland le infidel??

i dont know, I just thought it would be good to work in this post apocalyptic communist country for a change ... oh how wrong was I

want to explain that a little further?

Not really because its beyond my understanding, like a heap of the financial engineering that seemingly is confusing to the professionals as well (hence all the tears in the US and other places atm). Other then to say I believe citibank was recently purchased by one. And they trade using trade surpluses ? And I believe China has a fairly large trade surplus ?

currency trading is not zero sum

Yeah it is hast, even taggs is saying it is, he is just saying its a table tilted in your favour because there are players there with goals other then just making money. But honestly I don't think you understand what currency trading is. Tourism is nothing. They have a multi trillion dollar volume. And more importantly, you can visit countries and change your dollars in places where their currency is not floated.

no one here is talking about individuals investing in currency markets, we're talking about institutions

Actually its a case of you read a quarter of a thread... No one mentioned institutions up until you.

saying it's driven by speculation and rumor is a pretty big call, though i'll concede that it is pretty stongly influenced by them. but perhaps you could point out a market that isn't?

no one here is arguing that currency trading isn't risky. it's risky as hell, but it has a also has a very high return.

So what you are saying is exactly what I am saying except that you decided you need to rephrase it and you didn't like the odds I gave it. And personally I don't like your rephrasing. Because it can have a high return and it can also mean you lose everything and then some (apparently 100:1 leverage is not uncommon ... I read that in a NY Times ... I still rekon it had to be a misprint)

As for the speculation/rumour comments... bank interest rates. But be honest currency is one of most affected by that sort of risk (right up there with future exchanges ie. gambling on gambling ... sorry speculating ...). To the point where the trading started destroying sound economies like Malaysia and from memory the swedes or some other crazy people living in the ice. But ok you don't like the term, would you prefer to call it Market psychology and Politics ?

"Don't call it investing - this is speculation, and people should only be putting up risk capital they can afford to lose," Marc Prosser, chief marketing officer at Forex

good. i need to send some £ home

Not really because its beyond my understanding, like a heap of the financial engineering that seemingly is confusing to the professionals as well (hence all the tears in the US and other places atm). Other then to say I believe citibank was recently purchased by one. And they trade using trade surpluses ? And I believe China has a fairly large trade surplus ?

yeah, Citibank was lent $7.5 odd billion which is partially convertable to equity iirc. they needed this money badly and the abu dhabi wealth fund needed somewhere to invest, sounds like both parties got what they wanted to me...

maybe you shouldn't be arguing things you don't understand?

and what hast is saying is correct too. in terms of utility gained, currency trading is not zero sum.

So what you are saying is exactly what I am saying except that you decided you need to rephrase it and you didn't like the odds I gave it. And personally I don't like your rephrasing.

this whole time i am just pointing out that the profit seeking investor in the currency market does not have a negative expected value. you tried to claim that was the case and you quite obviously have no understanding of econoomics or finance apart from what you have read on the internet.

rephrasing it is import because it changes the meaning. what you said is completely wrong.

Because it can have a high return and it can also mean you lose everything and then some (apparently 100:1 leverage is not uncommon ... I read that in a NY Times ... I still rekon it had to be a misprint)

risk vs. return. if the return is there it will still have a postive expected value. and no that is not a reprint and another case of you having no clue as to what you're talking about.

But be honest currency is one of most affected by that sort of risk (right up there with future exchanges ie. gambling on gambling ... sorry speculating ...)

yes, currency is very volatile. i think i said that earlier in the thread.

To the point where the trading started destroying sound economies like Malaysia and from memory the swedes or some other crazy people living in the ice.

um, what? are you talking about the asian financial crisis? because that wasn't caused by currency trading... and i don't recall sweden having economic problems caused by currency trading either? though i cbf looking either.

that's a nice quote you've pulled from the internet somewhere. we could get pedantic and argue the definitions of investing vs. speculation but i really couldn't be bothered. but think about it this way, you could apply that quote to a tonne of different markets and it would still make sense.

the only reason i posted was to point out that saying currency trading has worse odds than a casino is utterly wrong and shows a complete lack of understanding of financial markets.

I need to buy some US$ - is it possible to set up a personal US$ bank account from .au?

maybe you shouldn't be arguing things you don't understand?

Unlike you ... I said I don't understand ... I notice you don't say you understand it either. (Puncuation and shift key will help your cause).

And I am not commenting on whether citibank wanted/needed it or not, only that its kind of scarey when these big faceless silent foreign government funds can come in and buy something as big as that. (tinfoil hat) The next war won't even have a round fired becuase it'll be over before we knew it started(/tinfoil hat)

As for the swedes it was around 90 / 92 and they had to pump interest rates up scarey numbers (vaguely I thought it was 25 or 50% because of an "attack" on the kronos.

Taggs both the Thais and Malaysian have some unplesant opinions of George Soros and his currency tradding. This is the guy who was able to break the Bank of London. Strange that, Mahatir defloated the currency and their economy began recovering. Sure it didn't cause the asian finacial crisis, but is it possible it made it worse then it "needed" to be.

As for the quote, Taggs, incase you don't know what forex is ... (that quote came from a senior marketing executive working for forex) Its the US Foreign Exchange). Interestingly I believe Soros calls the money he got from currency tradding "winnings". Those crazy guys who do it for a living what would they know...

And I understand the leverage taggs. To me 100:1 is scarey it means they are borrowing 10grand with $100 and the using that money in an enviroment where they could easily lose that $100 (or several times that, say if a currency drops 4 cents in a day) ... I don't understand derivatives, and I understand currency tradding well enough to know I am not anywhere near smart enough to play in it.

I need to buy some US$ - is it possible to set up a personal US$ bank account from .au?

If its for a holiday doesn't wizard or one of those have good international transaction rates, ie. front load a cc ?

Troggles: https://www.wellsfargo.com/inatl/consumer_services/personal_banking.jhtml

Unlike you ... I said I don't understand ... I notice you don't say you understand it either. (Puncuation and shift key will help your cause).

mate, i have a solid understanding of pretty much everything we've been discussing - you'd hope so because i'm in the tail end of a bachelor of economics/bachelor of commerce dual degree and i'm looking to do honours in corporate finance.

if you want to be pedantic about punctaction and capitalisation, maybe you should learn to spell 'trading'.

And I am not commenting on whether citibank wanted/needed it or not, only that its kind of scarey when these big faceless silent foreign government funds can come in and buy something as big as that. (tinfoil hat) The next war won't even have a round fired becuase it'll be over before we knew it started(/tinfoil hat)

they didn't buy citibank. they gave them a loan of $7.5 billion which of the top of my head was partially convertable to equity. at lunch time today citi had a market cap of 105 odd billion. even if that loan was completely convertible to equity they'd only own around 7% of it.

if there was some kind of a strategic threat to the company they would take action. it happens all the time. look at rio vs. bhp. your tin foil hat reaction isn't really necessary.

Taggs both the Thais and Malaysian have some unplesant opinions of George Soros and his currency tradding. This is the guy who was able to break the Bank of London. Strange that, Mahatir defloated the currency and their economy began recovering. Sure it didn't cause the asian finacial crisis, but is it possible it made it worse then it "needed" to be.

you do realise speculation and arbitrage are quite often seen as stabilising forces in forex markets (in both economics and finance cirlces) that cause prices to revert to their long term equilibrium positions faster and more efficiently, right?

you probably don't have much of a grasp of the economics behind exchange rates (pegged or floating) and speculative attacks. it didn't cause or worsen the asian financial crisis - it was a natural and necessary part of it. there are a number of different models of speculative attacks but the ones underpinning the asian financial crisis involved moral hazard problems due to implicit guarantees by central banks and a poorly regulated, developed and experienced banking sector.

in that case the speculative attacks were almost an inevitability, in the same way that downturns are inevitabilities after booms. it is very difficult and risky to launch a speculative attack for the hell of it. there usually has to be some kind of opportunity presenting itself, like the causes behind the asian crisis.

as for the rest of what you're saying... what is your point? financial and economic crises occur in all other markets too. financial regulators and institutions are always two steps behind the market because the global financial system is a constantly evolving organism. financial innovation will never stop, neither will the growth or the problems that accompany it.

As for the quote, Taggs, incase you don't know what forex is ... (that quote came from a senior marketing executive working for forex) Its the US Foreign Exchange).

see obes this is why a degree in finance from the university of google just isn't worth quite as much as a piece of paper from a real educational instituion. but i like how you are trying to 'teach' me stuff that is blatently wrong.

forex is short for foreign exchange. there is no such thing as 'the US foreign exchange'. the guy you quoted is from FXCM (edit so there's no confusion: Forex Capital Markets) a company that provides retail forex trading services. but thanks for the heads up.

I don't understand derivatives, and I understand currency tradding well enough to know I am not anywhere near smart enough to play in it.

it's got nothing to do with intelligence, only to do with risk/return profiles.

i'll say it again: the only reason i posted is to point out that your comment about currency speculation having worse odds than a casino is downright wrong.

i can't be assed replying to any more of your posts because every time i do you change what you're talking about.

last edited by taggs at 15:28:21 31/Mar/08

Obes is like eeyore

Most things to him are a fate worse than death

normally i would side with obes but quoting an FXCM noob is shooooonky. obes fails.

I need to buy some US$ - is it possible to set up a personal US$ bank account from .au?

i've been looking at that too. best option i found was just put money into fulltilt.com. of course you dont get intrest, but US bank intrest is fark all anyway.

obes: i'm guessing that there is serious problems with pegging. i assume the government buys the foreign currency at X-delta and sell the foreign currency at X+delta to maintain the peg. i guess this wouldn't be an issue but most governments that peg probably don't hold 100% reserves because they want to be able to print money. if everyone wants to cash in the currency then the government is in trouble because they will run out of foreign currency reserves trying to maintain the peg.

also, there is a very clear arbitrage opportunity here when the government overvalues the pegged currency (and vice versa). get the cheap pegged currency somehow and then swap it at the pegged rate. of course the problem is getting the pegged currency cheap when you are competing in the market against the government who is overvaluing it . (i think it was keynes that said not only do you have to be right, but you need to stay liquid until the market becomes rational again). i'm guessing this is where 'speculators' come in and borrow s*** loads of it (making a bet on a future drop) and start cashing it at the pegged rate for foreign currency. eventually the government runs out of foreign reserves at which point the pegged currency drops significantly in value and the 'speculator' swaps part of his foreign currency back to the pegged currency to pay off his loans. the foreign currency he has left are his profits. :)


i'm guessing this trick doesn't work in reverse because the government would be happy to print money to satisfy any demand for its currency.

i'm guessing this is partly why interest rates seem to increase when governments try to protect their currency against 'speculators'.

you probably don't even need 'speculators' for this situation to arise. i think this would naturally happen as a consequence of Gresham's Law. people who have a choice between holding the pegged currency and the foreign currency will surely choose the foreign currency if they know the government is maintaining its value. in such a situation the value of the pegged currency is the amount of foreign currency at the pegged rate DISCOUNTED by the probability that the peg will disappear. as more and more people switch the risk that the peg will disappear will increase and people will have a stronger incentive to switch. this is probably a better explanation as to why governments try to raise interest rates. but such an extreme action probably backfires because it signals to the market that their is a SEVERE RISK the peg will disappear. i reckon peg is doomed from the start.

last edited by hast at 20:57:09 31/Mar/08

most currency trading is about hedging 90% of the time ...

as in any form of speculative high volume trading you can only watch and trade trends.. you cant affect a market

ps my phat euros are looking good

also i bought a heap of euros at 64 now i'm thinking of buying a heap of aud for 58 .. not a bad return

give it 12 months then i'll play again

Bear Sterns knew all about complex financial engineering too ...

it's got nothing to do with intelligence

So its not a game of skill, but of chance ?

only to do with risk/return profiles

Form guide and Odds ?

i'm guessing this is partly why interest rates seem to increase when governments try to protect their currency against 'speculators'.

Interesting you mention that. I got told today that one of the reasons our currency is actually holding value at the moment is Japanese retirement funds are investing cash in our banks because of the high interest rate...

like i said 12 months ago the only thing you should be investing in is german/euro Aaa bonds

that includes countries.. that is the reason the euro is strong against the rest of the world

the last thing you should be worrying about is where the japs are placing there s***ty yen

hmm this thread just went way over my head... someone give me some money so i can make my car go faster lol.

y'know the funny thing about this Polish zloty is that the euro is dropping against it too o_O Dont know if I'd be investing in it but I think its a continuing trend till the Euro comes here in a few years

oh and if anyone has a crystall ball around please tell me when its safe to transfer my money to PLN ^___^ at the moment theres been a sharp drop on the graph and theres always a bounceback no ?? please !

last edited by Le Infidel at 03:33:36 01/Apr/08