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August 2011
From The Director

Greetings,

At a time like this, when the Japanese yen has gained such strength, a frequent topic of onversation is currency and how to use fluctuations in exchange rates to our best advantage.  As such, this month's article sheds some light on currency basics and a historic example of the possible pitfalls of speculation.

As always, we welcome your feedback. If you have any questions or would like additional information, please do not hesitate to contact your financial advisor. Should you not currently have an advisor at Select, please reply to this email and one of our senior consultants will contact you promptly.

Best Regards,

Imants Katlaps
Managing Director
Article

While it is known that trading in foreign currency is one of the most liquid markets in the world, trading 24 hours a day and averaging trillions of dollars per day in trades, the risks of dealing in foreign currencies must be considered before going that route.

Foreign exchange (FOREX) is basically the simultaneous buying of one currency and selling of another.  Such a transaction is represented by a currency pair.  For example, in the USD/EUR currency pair, USD is the base currency and EUR is the quote currency.  In other words, you are selling Euros and in exchange, receiving, or purchasing, US dollars.  Investors in FOREX keep a close eye on the market for fluctuations in currency pairs so they know when to buy one currency and sell another...
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