Forex Trading Strategies Blog

The Indian economy has grown from strength to strength and has become the fourth largest economy in the world in terms of purchasing power parity. The country’s economy is growing at a robust 8% per annum and its foreign exchange reserves have swelled to $140 billion form $ 59 billion in 2002.

The country had set out a road map to full convertibility a few years back and with its recent growth, its Harvard educated finance minister, P Chidambram, is planning to pre-pone the time frame for full convertibility.

One of the major impediments to achieve full convertibility is taming the country’s fiscal deficit. Chidambram has expressed confidence in achieving the target for the fiscal deficit to desired level of 3.5% of GDP supported by the strong economic growth.

However,India being a multiparty democracy, such decisions take time and are usually arrived through a consensus in a truly democratic manner. Chidambram has been trying to initiate a parliamentary debate on convertibility, but is having to wait as the supporting political parties have not turned around on the issue.

To read more on India's convertibility plan, click here.

The Indonesian Rupiah moved up to 9235 against the dollar on the news of S&P upgrading its rating outlook. The Rupiah this year gained 6.15% against the dollar, with the country’s central bank raising interest rates. Indonesia ’s interest rates are now the highest of the 14 major Asia-Pacific countries.

The central bank has raised the reference interest rate six times sine July to keep inflation under check. It now stands at 12.75%. The currency markets for the Rupiah witnessed hectic activity as speculators took long position in the currency.

By raising interest rates continuously, the Indonesian central bank has ensured that it sends out the right signals to the international community in maintaining a stable value for its currency, taming inflation and creating an enabling macroeconomic environment.

To read more about the Rupiah, click here.

The Philippine Peso strengthened to a 3 ½ year high of 51.48 against the dollar, with the nation’s exports growing at a scorching rate. The currency also took cue from S&P having raised the country debt rating to stable after the government’s commitment to reduce the budget deficit.

Exports jumped 16.8% in December to $3.83 billion. Export is a major contributor to the $85 billion economy, accounting for nearly two-fifths of the total GDP. The government has pinned a lot of hopes on exports to spur GDP growth to 6.3% this year for the 5.1% last year.

To read more on this issue, click here.

In an unexpected move, the Seoul Foreign Exchange Market Committee announced that it would limit access to information used by many people for Forex trading. This information instead will only be made available to banks and other select financial institutions.

This unexpected move by South Korea is in an effort to limit the volatile Korean Won. Seoul officials hope that will less information the Won will stabilize and remain a cheaper currency.

The government has also recently announced a deregulation scheme as well that was implemented today. Based on this, it raised the ceiling for overseas direct investments by Koreans to $3 million, up from $1 million.

With this announcement comes after the Won’s rise by 5% in the past 120 days. South Korean officials that in an effort to depreciate the Won, limiting access to Forex information should help. This is due to the fact that in the past many offshore traders with large amounts of cash was contributing to the volatile movements of the Won. Thus limited access only to banks for Forex quotes will decrease speculation on the fall and rise of the Won.