THE MAIN 'PLAYERS' IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.Large commercial and investment banks are the 'price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.

Forex news With Sigma Forex :

Operators of the currency market could legitimately expect a drop of the dollar against the main currencies today but it was not counting the activism of U.S. authorities. Indeed, the Bush administration was facing this weekend in an avalanche of bad news about the health of the U.S. economy. In addition to the bankruptcy of one of the largest banks in California, the U.S. Treasury had to reassure Wall Street after the last two U.S. groups, Freddie Mac and Fannie Mae, was considerably chahuté Friday in New York. Having received a drop of more than 85% of the value of their shares since the beginning of the crisis subprimes a year ago, the two groups have suffered at the end of last week a sling investors who speculation on the future of both companies. Since the acquisition of the business bank Bear Stearns under the aegis of the Federal Reserve, the Bush administration has demonstrated its intention to markets not drop bankrupt one of the pillars of American economic system. Thus, the Treasury Secretary, Henry Paulson, announced yesterday its intention to temporarily increase the credit line allocated to two groups of mortgage refinancing and he also mentioned the possibility of the acquisition by the federal government 's shares of both companies. Having managed to reassure investors by such a salutary voluntarism, the dollar appears on the rise this morning in front of the single European currency and the yen. However, this week is very sensitive to the dollar with the impact of Henry Paulson speech and publication of results this weekend of major U.S. banks. Hence, the triumphalism is not yet for now although the case Freddie Mac and Fannie Mae seems to be on track.

for more info,,,,,,,,,,,,,,,,,,,,,