Opportunities in Forex
The forex (FX) market is one of the most liquid markets, giving an investor global exposure and, with leverage, allows a person to take advantage of small moves in the market. With FX, you can freely go long or short on currency pairs; and typically, all you need to invest is to have a broad macroeconomic view on various countries.
For example, your view may be that the positive jobs data and falling unemployment is good for the US economy – which in turn means better GDP numbers that could lead to a stronger US dollar. On the other hand, with weakness and recession still prevalent in Europe, and with the central bank trying to support the economy with fiscal and monetary stimulus, things could possibly be leading to a weaker EURO. As such, an investor could go long on the USD and short the EUR, or buy the EUR/USD pair.
Part of Asset Allocation
While FX can be traded as a portfolio by itself, FX plays an important part of a broader investment strategy. Owning some FX in your investment portfolio could help you to diversify away some risk. For example, say you have a typical portfolio, one with both equities and bonds as part of a normal asset allocation process (which is also part of diversification). However, it could have an overweight in certain overseas bond investments. To reduce the interest rate risk, you could go long on the currency, as a currency typically strengthens when interest rates rise. In another instance, you could have a higher-than-desired exposure to a currency outside your home market. To prevent portfolio losses if your home currency weakens against the FX exposure, you could hedge out some risk using currency forwards to lock in a desired exchange rate.
With our dedicated currency specialist, we provide comprehensive trading strategies along with round-the-clock and competitive prices for FX transactions. Our trading strategies and services include technical analysis, options, spots, forwards, and portfolio hedging.
Please note that our private client services are only available for Accredited Investors, defined as individuals whose net worth is at least SGD$2 million (or its equivalent in a foreign currency) or whose income in the past 12 months was at least SGD$300,000 (or its equivalent in a foreign currency).