Interest rates drive the foreign exchange market. Global rates of interest rule the world of forex trading. The expert forex traders closely monitor the interest rates of every country to predict the right time to trade in the forex market. It is of utmost importance to keep an eye on the varied interest rates.

How does the interest rate affect forex trading?

The interest rates of the world

The monetary policy of the central bank is the driving force of the interest rates of the world. Whenever there is a change in the expected interest rate, the currency follows suit as well. The central banks wield a variety of tools of fiscal policy to influence the movement of interest rates.

The central bank generally performs two significant tasks. These tasks include the management of inflation and maintenance of the stability of the exchange rate of a country. The interest rate of a country is an estimation of the country’s economy. The central bank strives to increase the interest rate when the economy of a country grows and thereby induces inflation. On the other hand, the decline of interest rates during economic descent tends to stimulate the economy. Economies are always contracting or expanding. The central banks monitor the rates of inflation and permit the steady growth of the economy.

Economic cycle and interest rates

The consumers in the market begin to earn more when the economies rise, and the GDP witnesses a positive growth. The increase in earnings leads to an increase in the amount of expenditure, which eventually causes growth in inflation. The central bank strives to control the inflation growth and support the level of the target by increasing the interest rates.

When the economies recede, and the GDP witnesses a declination, the deflation in the market tends to be threatening for the forex traders. The central bank then steps in to decrease the currency interest rate for the stimulation of investments and spending. The low rate of interest attracts more and more investors. The forex market experiences a favorable growth in investment, which stimulates further economic growth and employment, leading to inflation. The forex trader needs to keep track of the impact of interest rate on the currency of a country. The higher the interest rate of the country, the greater is the probability of the growth of the currency.

Expectations of interest rate

The expectation of the occurrence of a variety of events constantly continues to change the dynamics of the market. A majority of the foreign exchange traders rarely consider the current interest rates. The forex traders usually try to forecast the overall direction of the interest rate, but it is more prudent to keep an eye on current events and updates for more efficient and profitable forex trading.

The forex trader needs to understand that the interest rate always shifts with changes in the fiscal policies of the central bank. If the interest rate keeps going down, then there will be a shift in the expectation, which will trigger a speculation shift as well. Besides, the gradual shift, there can be sudden shifts in interest rates as well, so it is better to stay alert all the time to make the most of forex trading.

Interest rate differentials

Forex traders often apply the widely popular trading technique of comparison of interest rates between two currencies. The comparison indicates whether the currency will weaken or strengthen while trading. The value of interest rate differential is the difference between the values of two interest rates. It also helps in calculating the probable shifts in currency interest rates. The foreign exchange market witnesses the biggest swings when the interest rates of two currencies move in opposite directions. And when the interest rate of one currency rises, while the other falls, the market experiences erratic fluctuations.

Nominal vs. Real Interest Rates

The nominal interest rate refers to the base rate or the interest rate of the currency before inflation. It is more profitable to focus on the real rate of interest instead of the nominal rate of interest during forex trading.

Keeping tabs on the interest rate is important for successful and efficient trading through forex trading brokers in the foreign exchange market.

Digital currency exchange (DCE), also called cryptocurrency exchange, is a web-based business that provides customers with services for trading any cryptocurrency for various assets like fiat money. The platform works solely online, and provides exchanges in electronic form and charges a fee for them.

Standalone traits that successful Cryptocurrency Exchange have

Today, there are around 1,600 cryptocurrencies in circulation, with a total market cap of nearly $289 billion. Given are five, among many, of the important features of successful cryptocurrency exchanges.

• Decentralized trading

This no-central-authority feature is the most advanced way to trade the cryptocurrency. As traders, it is natural to seek zero interruption and expect complete control over funds while conducting e-commerce. Exchanges are verified through cryptography by network nodes and recorded in the blockchain. This way, third parties cannot play middleman when two primary parties trade between them.

• Instant buying/ selling attributes

Not all come to trade on a cryptocurrency exchange. Some are there looking out for a quick option to either buy or sell a Bitcoin. Therefore, a cryptocurrency exchange should be flexible enough to accommodate the needs of both traders and nontraders. For one-time traders, the exchange should provide easy to access and instant order-placing features.

• Facilitate multi cryptocurrencies and multi-currencies trading

People do not transact just with Bitcoins in crypto trading; they look out for options that allow them to trade any small-cap cryptocurrency of their likings, such as SelfKey, monero or ripple. Therefore, an exchange should take into account the different categories of traders and allow everyone to exchange with any type of cryptocurrency. Further, a global exchange would facilitate currency pairings with more than 50 fiat currencies, not just with the USD and EUR.

• Margin trading

Margin trading is cryptocurrency trading where traders borrow money from a brokerage to buy an investment. It leverages a trader’s position to a trading eligibility level where marketeers can exchange more Bitcoins with the funds they have. A margin amount is loaned to the traders who, in turn, provide collateral, i.e., securities held in the investor’s account, for the deposited amount at a certain ratio level. When traders reach the eligibility mark, they can trade with the loaned amount. After the trade closes, the traders should return the loaned margin amount with interest.

• Futures trading

Futures trading is the exchange of any asset, e.g., cryptocurrency or real assets, at a fixed price conducted at a specified future date/time. The trading process is carried out based on a futures contract that represents the tradable resources’ value. Futures trading protects sellers against price falls and buyers against future price increases.

Some of the other key features facilitating a successful cryptocurrency exchange include:

• lending,
• token listing/IEO(initial exchange offering)/Launchpad,
• community interaction,
• validness and security,
• UI/UX functionalities
• low fees, and
• reliable customer service.

Conclusion

Crypto trading has become very easy and efficient with the help of platforms such as Bitcoin Code Review. It provides an automatic and manual trading facility. Click for more information. Regardless of a trader’s experience level in the cryptocurrency exchanges, these traits would make it possible for a successful and dominating cryptocurrency trade.

The debate between cryptocurrency and Fiat currency has just got interesting. Especially in the wake of the coronavirus epidemic, which has literally devastated our overall economic scenario, questions are now put up against the efficacy of the fiat currency to save our global financial system. The highly contagious disease has virtually put a full stop on businesses with most of the production and service activities cease to be operational.

Amid such doom and gloom, most nations are scrambling to hedge their economies against the devastating impact of coronavirus. Rescue packages are being announced as central banks come into action to support their dwindling economies. One such significant announcement has come from the Federal Reserve, which has announced that it is going to infuse infinite currency into the system. This, in turn, poses serious questions about the valuation of Fiat currency.

Law of Economics

It is a well-known law of Economics that an increase in the supply will have a negative impact on its demand and vice versa. More money you put into the system, less desirable it will become. The same law applies to the valuation of Fiat currency and the decision of the Fed to immediately supply $1.5 trillion is bound to have a negative impact on the dollar’s value. This decrease in the value of the dollar is expected to prove beneficial for other avenues of investment, such as cryptocurrency, gold, and other commodities.

Specifically, the value of digital coins is expected to rise as investors will switch to the safe heavens of investment where they can earn more profit on their investment. It is true that the coronavirus pandemic has also had some negative impact on the cryptocurrency market, but then one needs to appreciate the resilience of the digital coins, which bounced back from the initial shock immediately. The recovery was quick, especially when compared to the stocks in the equity market and now the crypto market is looking well-placed to consolidate its position as the growth curve of coronavirus infections seems to flatten out.

Another important indicator that points towards an increase in crypto valuation is the upcoming event of Bitcoin halving, which will sometimes happen in the month of May this year. Post the event, the rewards associated with the mining of Bitcoin will be halved from its current level of 12.5BTC to 6.25 BTC. As per the analyst of coinlib.io, this will constrain the supply of the digital coin in the market, thereby making it more valuable. The increasing adoption of Bitcoin and other digital currencies across the globe is also expected to give a fillip to their value. Governments and Central banks are now realizing that the adoption of cryptocurrency is only going to favor them with high efficiency, low operating cost structure, and global reach. In sum, the coming time seems to be more favorable for cryptocurrency, while the fiat currencies embrace uncertainties and turbulence amidst speculation of a global financial meltdown.

Bitcoin Circuit

Amidst this favorable scenario, if you are also thinking of taking a plunge into cryptocurrency trading by becoming part of the Bitcoin community, then there is no better place to start then the automated Bitcoin trading software, the Bitcoin Circuit. According to the Bitcoin circuit review, this automated trading software is very convenient to use and can help you to earn a handsome amount of money from your Bitcoin investment. Give it a try and feel how convenient and easy it is to trade with Bitcoin Circuit.

Euro Prime is one such online brokerage firm that offers a unique trading platform to its traders. The firm is to provide a seamless trading experience to all its traders. With exceptional customer service and trading platforms, the Euro prime is one of the leading brokerage firms, which is highly popular among the traders. The availability of a wide range of tradable assets makes it one of the best trading platforms.

The firm is best for both novice and seasoned traders. The trading platform that the firm offers has all kinds of tools and charts to help the clients to predict the financial market. The trading platform is advance but still easy to use even for the beginners. The firm offers SIRIX web trader for trading to its clients. SIRIX web trader is one of the most praised trading platforms which don’t need any software to download. The SIRIX web trader is accessible through all devices like mobile, PC, tablets, etc. The firm has also launched its SIRIX mobile app which is highly suited to the traders who are on the go. With the help of the SIRIX mobile app, a trader can keep a record of his trades and balance anytime and anywhere.

Making deposits with Euro Prime is easy as it supports various deposition modes like bank transfers, credit cards, etc. The firm offers multiple accounts to its clients, and a client can pick any account he like considering the risk that he can bear and his experience with trading. One of the best things about the firm is that it allows all the account holders to take benefit from its educative material. The various accounts that the firm offer is Mini, Standard, Platinum, VIP, Islamic, and Gold. The informative resources are available in all formats including pdfs, videos and eBooks. The firm strictly follows KYC and AML norms and is registered with the International Financial Services Commission of Belize.

The firm offers extraordinary customer service which is available 24/7. Anyone can reach to their support team via live chat, email, and calls. The website also has a dedicated FAQ section where anyone can find the answer to different types of trading questions.

The Euro Prime trading platform offers multiple charts and analytical tools which help the traders to trade profitably. The online brokerage firm also provides daily, weekly, and monthly market analysis. Though the financial market is unstable, the availability of the firms like Euro Prime boosts the chance of profit from trading.

In a recent declaration from the Reserve Bank of India (RBI), it remarked that the citizens of India don’t need cryptocurrencies as the nation’s mainstream financial system had already been working on solutions for cross-border remittances. However, RBI pointed out the legal status of cryptocurrencies in the nation and confirmed that there is no ban on cryptocurrencies.

In RBI’s response to IAMAI’s petition, the bank clarified that the cryptocurrencies are not banned in India; rather, it made it clear that commercial banks and other several regulated financial establishments are prohibited from offering their services to the cryptocurrency business.

The RBI vs crypto hearing has witnessed innumerable happenings in the last few days. You can get a detailed look at what took place inside the court room yesterday.

The RBI also stated that,

The RBI has been able to ring-fence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.

It was a response from the Central bank to a petition filed by the Internet and Mobile Association of India (IAMAI), which requested the Central bank to re-evaluate 2018’s circular to refrain from dealing with cryptocurrencies.

The IAMAI members comprise of cryptocurrency exchanges, which had earlier approached the Supreme Court of India against the RBI action. Earlier this month, in a hearing, the association put forward that banning the trading of cryptocurrencies with the absence of law was a legal business activity; yet, RBI had efficiently banned it by obstructing the access to banking channels.

Further, the RBI had highlighted a few risks, which included money laundering and terror financing by using cryptocurrencies. The supporters of crypto had argued that cryptocurrencies open up the financial sector, which creates a more comprehensive ecosystem. Few of them suggest that payments using cryptocurrencies are much faster and cheaper than mainstream counterparts.

As far as RBI is concerned, cryptocurrencies raise money laundering threats and may finance terrorist attacks explaining,

Any possible avenues which facilitate anonymous cross-border fund transfer have to be acted upon swiftly and stringently dealt with. It is an admitted fact that VCs have been used to purchase illegal and illicit goods ranging from guns and ammunition to drugs.

The Response from RBI also disclosed that, during the discussions earlier in 2018 with the government on whether to regulate or ban cryptocurrencies, the RBI stated that ICOs are prohibited and asset funds in virtual currency are not allowed to operate or set up within the Indian Jurisdiction.

As per legal experts, the viewpoint on crypto trade might pose a risk to sovereignty could be a weak point if not attested with few examples of using virtual currencies to fund terror attacks in the past.

After looking at the developments throughout the day, CryptonewsZ reported that RBI had not done good research before announcing its anti-crypto directive.