Winners and losers in calm currency markets

Posted by Marcus Wright on July 31, 2009
Currencies, Financial Markets, U.S. Dollar

The global currency markets are enjoying (or enduring, depending on one’s point of view) a period of extraordinary stability, with major currencies like the dollar, euro, yen and sterling locked in tight trading ranges, according to an analysis by Katie Martin of Dow Jones Newswires.  This reduced volatility – after a period of wild swings during the worst moments of the global financial crisis – is good news for companies seeking to plan ahead, but bad news for currency market professionals (foreign exchange traders tend to make more money during periods of high volatility).  Another benefit for the corporate world is the cheaper price of hedging against future currency volatility.   Katie quotes an analysis by Nomura, which calculated that currencies have been in an unusually tight trading range for a period of 90 days. In the past, there have been only two longer periods of such stability, the Japanese bank says, of 95 and 99 days.  Indeed, the euro has been quoted close to $1.41 and the pound close to $1.63 for several weeks.

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