The world has become a global village, shrinking in size financially and continually. Goods and services are now easily bought and paid for across the borders making it expedient for currency conversion. The volume of trade between Australia and the US is valued at several billions making the need of foreign exchange urgent. The day to day deals on forex are mainly due to the need for conversion between currencies, for example, a trader may buy the USD at a certain rate with the hope that the AUD will fall, then if his prediction comes to pass he then sells the USD for AUD for a huge profit depending on the difference and the amount involved.
WHY CURRENCY CONVERSION?
This complex analysis is done by paying good attention at graphs of past activity of exchange rates between the AUD/USD which serves to guide the trader on possible price movements. So the conversion between USD and AUD serves to be a critical instrument in forex trade as even after the trade the forex trader may choose to cash his/her money in any of the currencies which suits him, either way, the currency converter serve as the intermediary
Foreign exchange naturally involves so many currency conversion as a fundamental part of the business for example when a corporation want to make a large purchase involving billions of dollars from another country, it has to pass through currency conversion. The USD is the most actively traded currency and has need of being converted into to her national legal tenders such as the AUD. It’s important we realize that there is no central market where currency is being traded and as such we don’t expect currency conversion to be any different.
HOW IT OPERATES
The conversion of AUD to USD is done at the prevailing exchange rate and this is highly volatile and may change any minutes as it is controlled by a vast majority of factors most of which the traders have absolutely no control over. Sometimes patterns are produce in the price movements because a vast majority of currency speculators expect the market to behave in a certain way due to an in depth study of it past behavior under the same conditions. This adds to the variability of the data set and subjects currency conversion rates to more unpredictability. The money market is truly vast with a lot of active players and so they rules guiding it activities are somewhat complex and not easily inferred... but no matter the direction of trade, the conversion of currencies will still be absolutely essential to the operation of the market. As long as there is international trade, there will be the conversion of one currency to another, apart from a few economic blocs such as the euro zone which adopts a single currency- the euro. Looking at it differently, the converters of currencies seem to be the actual drivers of the international economy. The operation of currency conversion is what makes forex trading possible as forex traders take advantages of differences in rates.
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