The world’s biggest financial market is composed of players beaming from all categories and industries. Although Forex was initially intended to be for bankers and other large institutions, it did not prevent small players from entering the scene. As a result, the market is filled with several players, and we are going to pick them out. So without further ado, here’s a brief take on the major players in the Forex market.
1. Important Banks
The Forex market is decentralised, and thus, banks tend to determine exchange rates. Considering the aspects of supply and demand, they tend to be the ones who make matters meet. But these banks are no ordinary ones and are collectively known as the interbank market. They are responsible for a vast number of transactions involved in the Forex market and continue to display a certain level of dominance. A few of these banks include JPMorgan, UBS, Barclays, Deutsche Bank, HSBC, Citi and so on.
2. Commercial Companies
As a form of doing business, numerous companies tend to take part in the Forex market. The best type of example for the same comes from the smartphone brand, Apple. Since it needs specific parts for its products, they tend to gain the same from countries like Japan and so on. Due to this, the company must first exchange its US dollars to Japanese Yen before purchasing the parts that they need. Since they are relatively smaller than the interbank market, their transactions involve commercial banks.
3. Central Banks
European Central Bank, the Federal Reserve and the Bank of England are specific examples for Central banks that are also players in the Forex market. Their presence in the market tends to be of utmost importance since they are in control of interest rates as a move to control and keep inflation in check. Instances where they feel the need to lower or raise their currency also come into the picture, and these banks begin to alter exchange rates through a number of operations. Due to this, individual investors and other such players are always on the lookout for changes in monetary policy and other similar aspects.
Speculators are all over the place, and it is not hard to spot them. Their trading volume and mode of operation largely depends upon the outcome as they are always looking to gain solid returns. For this purpose, they go-ahead to implement several strategies that help them reach a specific position or gain a good amount of profit. In case you’re planning to join the Forex market, make sure that you’re aware of everything before you do so. Moving forward without understanding the market will lead you into a load of trouble.