The Rand has continued its volatile behaviour, touching just over 10.50 in August (the price target area shown in our previous post) before strengthening by almost a Rand over the next 4 weeks or so.
With all this volatility, one question that inevitably arises is:
WHO behind the scenes is responsible for manipulating all these big swings on currency markets?
If you also have this question in your mind, you need to better understand the size and extent of the global forex market, which we will do so with the below chart.
The forex market is by far the single largest financial market that exists, having exploded as a financial tradable market in the past 14 years – from a daily turnover of US$590 billion in 1989, to US$5.345 trillion in 2013.
That is 5,345,000,000,000 US Dollars … Each and Every Day!
To put this into perspective:
- This is more than the total daily turnover of global stocks, bonds, commodities and other tradeable derivatives put together!
- It is more than the total output (GDP) of the United Kingdom and France combined last year!
- …And almost 14 times South Africa’s total GDP for 2012!
The forex market is also the most liquid of any financial market.
There is always a buyer or seller available in the market – 24 hours a day, five and a half days a week. This market is permanently awake from when Japan wakes up on Monday to when the US closes late on Friday afternoon, and is traded (mostly electronically) from every conceivable spot on the globe, be it by individuals, companies, institutions, hedge funds, banks or central banks, to name a few.
As you can therefore appreciate, being both massive and liquid, it is simply too large for any single institution or even a single government to manipulate on the open market.
But being a very liquid market, it shows excellent Elliott Wave characteristics (psychological patterns), which enables us (once we have determine where we are in such a pattern) to predict with a high degree of accuracy where the investor herd in such a market is likely to be heading next – even if they don’t know themselves!
Intriguing stuff, isn’t it?
Want to see more about this, and the composition breakdown by currency of this turnover? We cover this in our October 2013 Rand & Sense newsletter here (you will need to be logged in).
As always, would appreciate your feedback and comments.
To your success~
James Paynter
P.S. And if you are exposed to Rand currency fluctuations, and are feeling frustrated by the Rand's wild movements, let us assist you by giving you up-to-date forecasts so that you can better time your transactions, and save you time, money, stress and effort.
Simply subscribe here to our forecast service on the Dollar/Rand, Euro/Rand or Pound/Rand (and remember we offer a full 60 days risk-free money-back guarantee).
1 Response to "Putting Global Forex Markets in Perspective"
always very informative...thank you James and your team.