forex
By Ongtina
@ongtina (1232)
Singapore
May 9, 2010 10:49pm CST
We can know from watching news if a currency is going to appreciate or depreciate. However, when it comes to seeing the currency against another country's currency, I become unsure.Can someone help me with this?
If I think USD will appreciate, do I buy(arrow up) or sell(arrow down) with regard to Eur/Usd. Can you explain how you are looking at it? What does it say of eur when you chose what you chose(buy/sell)?
1 response
@pupupd (1515)
• India
12 May 10
Hi,
I think I can help you out in this. Since, I am currently working on a project called Wallstreet systems which is a StateStreet product, and deals with all kinds of FX (forex) products. So I am quite familiar with all these terms.
Now consider a currency pair EUR/USD.
Let the market rate be 1 EUR = 1.2 USD. This simply means you can buy 1 EUR if you pay 1.2 USD or you can buy 1000 EUR if you pay 1200 USD.
Now there can be two cases, either EUR or USD appreciates/depreciates.
Case 1 : When EUR appreciates or USD depreciates, means value of EUR is increasing and you have to pay more in order to buy EUR.
For example the rate will become 1 EUR = 1.3 USD. Now in order to buy 1000 EUR you have to pay 1300 USD. In such cases mostly people SELL their EUR if they had bought it at lower EUR/USD rate.
Case 2 : When EUR depreciates or USD appreciates, means value of EUR is decreasing and you have to pay less in order to buy EUR.
For example the rate will now become 1 EUR = 1.1 USD. So in order to buy 1000 EUR you have to pay just 1100 USD. In such cases people BUY if they estimate that is the lowest rate. Of course it can go lower as well.
So now I hope you are clear with all the FX concept. 
If anything which you think I have mentioned wrong, you can PM me anytime.
Cheers!!
If anything which you think I have mentioned wrong, you can PM me anytime.
Cheers!!@ongtina (1232)
• Singapore
13 May 10
OMG, I got the whole concept wrong !!! Thanks for giving such a clear explanation. No wonder. So I only have to think do I pay more or less for the 1st currrency. If I have to pay more(of the 2nd currency), that means the 1st currency is appreciating/2nd depreciates, I'll sell and vice versa I'll buy if I think I pay less for the 1st currency. Thank you so much :D
@pupupd (1515)
• India
15 May 10
Yes you have to decide whether you should buy or sell any of the currency which you want or you currently have with you.
If you have EUR which you had earlier bought at 1.2 rate and now USD has depreciated/EUR has appreciated, that means now the rate has become EUR = 1.3 USD, so you can sell your EUR and buy USD, so you will have 0.1 profit/unit. If you have 1000 EUR, after selling your EUR you will have 100 USD profit. 
