Quote:
Originally Posted by Libros
CB don't care? really?
i've read an article on forexnews said:"US dollar weakening because of trader attack" what it means?
ah, if i can ask you one more question.
no one can answer for this question until now. hope you may want to answer.
this is fantasy story, but what if this happen in real life.
when trader(groups or single or mass-no matter-) can make -let's say 100 billion dollar a day- who is the loser? i doubt if only from loser trader.
is it central bank(whose have the currency)?
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it would depend who is the Counterparty, meaning how the profits are made, but of course as from a certain level, due to the profits made that moved the markets in one direction, central banks would take it in the chin and or currency stability would have to intervene. we are in a pool : there s a definite volume of water, so it is a "win-lose" situation -- this is why liquidity injection creates inflation : this is because you have more money "chasing" the same number of goods / services.
example : interest rates are rising making few $ billion worth of Options on futures contracts worthless, or exotic financial instruments worth close to zero : you have a counterparty ( a creditor) or a clearing house (collateral, whose mission is to provide liquidity, so it has to take the loss) : result is that market on those instruments will drop ... with a panic selling.
exni