Now almost anyone who can only make a first deposit to open a real account can trade in the Forex market. But it was not always so. Until the late 1990s, only “big guys” – bankers or large companies – could trade currency. This situation arose because then the owners were allowed to the market from ten to fifty million dollars. But as the number of Internet brokers increased, conditions softened, and it became much easier for retail traders to open accounts.
Below we will talk about who is currently participating in the Forex market.
Since the spot forex market does not have centralized management, it is the largest banks in the world that establish exchange rates for each currency. But at the top of the management they are not the only reason. These large banks, collectively called the interbank market, conduct a huge number of currency transactions every day for their clients and for themselves for amounts in excess of $ 5 trillion. Several such super-banks include UBS, Barclays Capital, Deutsche Bank and Citigroup. With this in mind, we can safely say that the interbank market is a foreign exchange market.
Large commercial companies
The main reason why large companies participate in forex trading is the need for direct currency exchange for further settlement with partners. Since the volume they trade is much lower than in the interbank market, they usually use small banks for their operations.
In addition, mergers and acquisitions (M&A) of large companies can also affect exchange rates.
Governments and central banks
In fact, these participants trade on the foreign exchange market for the same purpose as large commercial companies. They need it to continue making payments in international trade and processing their foreign exchange reserves.
Meanwhile, central banks have a huge impact on the foreign exchange market, when interest rates are adjusted in the context of inflation control. By doing this, they can influence the valuation of the currency. Also, cases where central banks intervene, directly or orally, into the foreign exchange market are often not infrequent, in order to redistribute exchange rates. Sometimes central banks decide to massively sell or buy the national currency, considering. That she is estimated in the wrong way.
Of course, what market without speculators. At Forex, these players are allotted almost 80% of transactions. They openly play at the rates, tightly analyze the situation on the market and conduct active trade. Actually, due to their work, Forex became the most popular and most highly liquid market on the planet.