Zebu blog

Category: Currency

  • Unlocking the Mystery of Reserve Currencies: Why USD Reigns Supreme

    The United States dollar (USD), which accounts for more than 60% of all international transactions, is often regarded as the world’s reserve currency. The USD is the world’s reserve currency, but why?

    US economy size and stability: The US economy is the biggest and one of the most stable in the world. The USD has gained confidence due to its size and stability, making it the currency of choice for international trade and investment.

    As the standard for all other currencies, the US dollar: The US dollar is frequently used as a reference price in international trade, including the cost of commodities like gold and oil. This increases the demand for the currency because the value of numerous items is now stated in USD.

    The US’s status as a worldwide powerhouse: The US, one of the most powerful nations on earth, is sometimes referred to as a global superpower. The nation is a dominant force in the world, and this supremacy is reflected in the value of the country’s currency.

    The US Federal Reserve is present and is regarded as one of the most powerful central banks in the world. The US Federal Reserve is the nation’s central bank. The Fed has a huge influence over the world’s financial markets, and its decisions may have a substantial impact on the US dollar’s value.

    International trade: Many nations utilise the USD as a means of exchange for trading with one another, making it a common currency in this sector. Because of this rising demand, the USD is a favoured currency for many companies and investors.

    A number of variables might affect the link between the value of the Indian rupee (INR) and the value of the US dollar (USD).

    Balance of Payments: The exchange rate between the INR and the USD can be significantly influenced by the US-India bilateral trade balance. If India has a trade surplus with the US, it signifies that its exports are outpacing its imports, which will cause the value of the INR to rise in relation to the USD. On the other side, if India experiences a trade deficit, the INR would weaken.

    Interest rates: Differences in interest rates between India and the US may have an effect on how much one currency is worth in the other. The INR may appreciate if interest rates in India are greater than those in the US because higher interest rates may draw in foreign capital. The INR, on the other hand, may depreciate if interest rates in the US are higher.

    Political stability: The exchange rate between the INR and the USD is significantly influenced by political stability. Political stability may boost investor confidence and cause the INR to appreciate, whilst political instability might cause the currency to depreciate.

    Inflation: Both US and Indian inflation can affect how much the two currencies are worth. The INR may depreciate if India’s inflation is higher than the US’s, while it may appreciate if India’s inflation is lower.

    Economic growth: The pace of economic growth in the US and India may have an effect on the USD/INR exchange rate. The INR may appreciate if India’s growth rate is higher than the US’s, while it may depreciate if India’s growth rate is lower.

    As a result of a number of factors, including the size and stability of the US economy, its status as the global standard for currencies, the US’s status as a superpower, the existence of the US Federal Reserve, and its widespread use in international trade, the USD has emerged as the world’s reserve currency. The dominance of the USD as a reserve currency has wide-ranging effects on the international monetary system and the world economy.

  • The Impact Of Inflation On The Forex Market

    The foreign exchange market, or forex, is a very volatile place. Volatility is what makes liquidity on the forex markets. As liquidity goes up, your chances of making money on your investments go up. But inflation is the main thing that is keeping the FX market from going up. This makes things hard for forex traders. Because of this, online currency trading also suffers.

    The rising rate of inflation around the world has caused a major Forex crisis that has messed up all previous financial calculations. The forex market is having a hard time right now because investors are getting scared and moving their money to safer places like fixed-income securities and gold.

    Inflation Across the Board

    When prices go up past a certain point, this is called inflation. This is what happens when a currency tends to lose value. Because of this, prices have gone up. When currencies lose value, the prices of goods slowly go up over time. The rise in commodity prices makes it harder for people to buy things. This is called the “depreciation of capital.” In this situation, online forex trading, which was once a priority for a forex investor, is now a liability. When people can’t buy as much, the market is more likely to get out of balance because the demand for foreign currency drops. When people’s ability to buy things goes down, inflation is more likely to start.

    This is true for both stock markets and FX markets. If you planned to open a demat account because you wanted to make money on the stock market and inflation is taken into account, the same no longer holds true. Some people think that the current situation in the world is just a sign of an upcoming recession. This is backed up by how investors act all over the world, not just in India. Most investors are told to put their money in “safe” things like gold and oil.

    Events around the world and money

    Not only is inflation making things worse, but there are wars happening all over the world, which makes it harder for global currency markets to recover. Investors are more worried than ever because of the conflict between Ukraine and Russia and, more recently, China’s recent military actions on Taiwanese soil that are seen as a provocation. So, fear of a recession caused by events around the world is a big reason why prices are going up. Recently, investors were looking forward to starting online currency trading as a result of the end of a global health crisis. However, more problems came up, and investors stopped trading again. Because everyone is worried about inflation, the expected boom in IPOs has also died down.

    How Inflation Affects Foreign Exchange

    Online forex trading has suffered a lot, just like many other types of business. Forex is an “over-the-counter” digital market where currencies are bought and sold. Since forex is traded in pairs, the value of each currency is judged in relation to the other currency in the pair. The value of a currency is based on how well the economy of the country whose currency it is is doing. When you buy a country’s currency, you are actually buying a piece of that country’s economy. If you think a currency has good prospects, you are more likely to buy it. You won’t invest in a country’s currency if it has inflation, which has happened in a lot of countries in the past few months.

    Various Investments

    Inflation can make it hard to do any kind of financial business, like trading currencies. Even if you can’t trade on Forex right now, you can still open a demat account with Zebu and invest in the stock market, which seems like a good idea.

  • Top Forex Trading Mistakes To Avoid

    India has recently become a popular destination to trade currencies online. More and more people want to profit from changes in currency prices, so they are getting into the currency market. If you want to start doing intraday trading in forex, this post is for you. Here are some of the most common mistakes that both beginners and experts make, along with suggestions for how to avoid them.

    1. Relying on leverage a lot

    There are two things to know about trading with leverage. You may be able to open a big position with a small amount of the transaction’s value. If the deal goes well, using a lot of leverage can help you win a lot more. But if the deal doesn’t go as planned, you could also lose a lot of money.

    To avoid making this mistake, you should always be careful about how much leverage you use. You should only use leverage if you can afford to lose it. In this way, you can protect yourself from large losses a lot.

    2. Ignoring technical indicators of trading

    The daily price changes on the currency market are affected by technical factors. Online forex trading is a sure way to lose money if you don’t know about or pay attention to technical trading indicators.

    To avoid this mistake, base your trades on technical indicators like MACD and candlestick patterns. This will help you predict how prices will move and make the right changes to your holdings.

    3. Trading for revenge

    Losses are a part of investing online that can’t be avoided. This is true even when it comes to the currency market. But when they lose money, a lot of traders give into revenge trading. Revenge trading is the act of trying to make up for losses by increasing trading capital.

    But this is not a good idea. If you give in to your feelings when trading, you will make bad decisions. To avoid this, you should always take a few days off after a loss to heal. In the meantime, think about and reevaluate your losing trade to figure out where you went wrong. Because of this activity, you will get better at trading.

    4. Taking positions before the news comes out

    This is a mistake that a lot of traders, especially new ones, tend to make. They make trades right before important news comes out so they can make money off of the volatility. Most of the time, though, that kind of move doesn’t work.

    During times of high volatility, when you trade forex online, the price changes may come as a surprise. Even if the news is good, the changes in the price of the currency pair might not be right.

    The best way to avoid making this mistake is to avoid trading before any news comes out. Wait until the news event is over and the market has calmed down before making any trades.

    Conclusion

    Before you start a forex transaction, you should always make a plan and stick to it. Put in place the right stop losses as well to lower risks. So, if you want to learn more about FX online trading, you should contact Zebu right away. For forex trading, you need a demat account and a trading account. Both of these can be opened online in just a few minutes.

  • The Common Misconceptions About Currency Trading In India

    Trillions of dollars change hands every day on only one market – the forex market. If you’re interested in trading foreign currency online, this post is for you. Here are 10 of the most common FX trading myths.

    1. It’s easy to trade in forex.

    This is one of the most common misconceptions about forex trading. But it’s just plain false. Foreign exchange trading is hard and requires a lot of market research, planning, and knowledge of how the market works.

    2. It is necessary to predict movement

    Traders who do their FX trading online often make this mistake. They think that if they can predict how the market will move, they can make more money. But it’s really not that easy. Instead of trying to guess what will happen, it’s easier and more accurate to just follow the trend.

    3. You must make a substantial investment.

    One of the good things about the FX market is that you don’t have to spend a lot of money to trade there. In reality, the way the market works is based on the idea of leverage. Leverage is when you put in a small amount of money but can take on positions that are much bigger than what you put in.

    4. Using more leverage is smart.

    In line with what was said before, many traders think that the more leverage they use, the more money they could make. Even though this is true, the same strategy could also fail. For example, if your position doesn’t go as planned, you could lose a lot of money because you have more money at risk.

    5. You must always keep an eye on the market.

    This is another one of the most common mistakes people make when they trade FX online. Even though the market is open all the time, you don’t have to keep an eye on it all the time. Just set aside a certain amount of time every day and use it to keep track of what’s going on.

    6. It’s easy to get rich quickly.

    People often think that trading forex online will make them rich right away. But that’s not the case. To do well and make money, you would have to be very focused and do a lot of research.

    7. The most advanced forex strategies always work

    Even though they have their place and time, complex techniques may not always work. Your goal and the direction of the market should be the main things that tell you what strategy to use.

    8. The forex market is rigged

    If you make a few bad trades, you might start to believe this false idea. But it’s just a myth; there’s no truth to it. Because the forex market is so big, it is impossible for one business or a small group of businesses to control it.

    9. You can use the strategies of other people.

    Trading foreign currencies online is not as easy as it looks. Since traders’ expectations and the way the market is moving now may be different, the strategies that work for one trader may not always work for another. It is always better to come up with and use your own approach instead of copying what others do.

    10. The more trades there are, the better your profits can be.

    You don’t have to do a lot of deals to do online FX trading. If your plan is well thought out and your goal is reasonable, you can make money with just a few trades each month.

    Conclusion

    After the myths about it were busted, you can now join this financial market and start trading FX. To trade in FX, you would need a demat account and a trading account. You can quickly open a trading account and a demat account at Zebu.

  • Things You Should Know About The Currency Market In India

    Indians know a lot about the equity and stock markets in their country. But the currency market in India is confusing to a lot of people. Understanding the basics of the Indian currency markets is important if you want to make money trading forex online. Before you do any kind of investing, you should learn how it works.

    In the same way that you should be careful when you first start trading on the currency markets, you should also be patient when you are learning how to trade on the stock market. You might feel nervous at first since the concept of trading with currency can be new to you. But there are some basic things you should know about the markets and how they work that can help you start investing. You might learn more from real-life situations than from any book. Because trading currencies isn’t as common in India as it is in other parts of the world, there are five things you should know.

    1. Is currency trading legal in India?

    In India, online forex trading has not become as popular as other types of investments. The main reason investors don’t trade currencies is because the Reserve Bank of India puts limits on currency trading. They find that traditional equity trading, which starts when you open a demat account, is easy to understand and easy to do. But trading currencies in India is not as hard as it might seem at first. The Indian Rupee must be used as the base currency in all trades for the Reserve Bank of India to let people trade on the Forex market. The Reserve Bank of India has added GBP-USD, EUR-USD, and USD-JPY to the list of assets that can be traded. These are all cross-currency pairings.

    2. Know what the different Indian currency markets are.

    If you want to trade currencies in India, you might not need to open a demat account. Still, you’ll need a Forex trading account, which could be linked to a bank account. After you’ve done this, you can trade on two main types of currency markets. They include both spot markets and futures markets. Due to the limits on currency trading in India and the low profits that derivatives used in currency trading offer, investors choose to put their money on the futures market.

    3. What factors affect the Indian Foreign Exchange Markets?

    Forex trading online is not for the cautious trader. You need to be aware of the risks because changes in currency and the economy could affect other countries. Currency prices change because of a number of geopolitical factors and events. Central banks, on the other hand, often have an effect on the Forex markets. Central banks use a variety of tools to do this, such as those that affect monetary policies, those that change the rules of the exchange regime, and those that affect currency markets. The Reserve Bank of India, which is the country’s central bank, is very important to the way currency markets work. It does this whenever it needs to, keeping the Indian Rupee from losing value in the process.

    4. Sign up to trade currency in India

    SEBI, which stands for the Securities and Exchange Board of India, is in charge of keeping an eye on the middlemen who work in the Indian foreign exchange market. If you want to trade currencies, you have to sign up with a broker that SEBI has given permission to be regulated. Brokers who are allowed to trade in currencies by SEBI must have a current licence from SEBI.

    5. Trading on the Indian Foreign Exchange Market

    Once you have signed up with a SEBI-approved Forex broker and put money into your account, you can start trading on the currency market using the Forex online trading platforms that your broker offers. You can be successful in trading by using a number of different strategies. But if you want to trade something, it’s best to start with small trades, especially in places like India, where the currency market is still growing.

    If you would like to get started with currency trading, open an account with Zebu today and get started now.

  • Currency Trading In India – Why You Should Get In Now

    International corporate heavyweights have set up shop in India because of the country’s size, the scope for innovation, and the soundness of its financial sector. From a highly regulated environment to a more liberalised one, India’s robust and stable financial sector has gradually evolved.

    It has been ranked as the third most attractive investment location in the world by UNCTAD’s World Investment Prospects Survey. Due to the country’s liberal rules, the Indian market offers enormous potential for profit.

    Furthermore, currency trading in India is becoming the go-to place for traders from around the world to transact day and night, thanks to this dynamic environment. In India, the foreign exchange market, also known as the currency trading market, serves as a marketplace for the exchange of foreign currencies.


    Market information in a nutshell

    The NSE, BSE, MCX-SX, and United Stock Exchange all offer trading platforms for currency futures. With Zebu’s lowest brokerage fees, and our credibility as one of India’s best share market brokers, we guarantee that you will have access to the best trading accounts in the country.

    The currency market is open from 9:00 a.m. to 5:00 p.m. on weekdays. For currency trading, there is no cash or equity form, like we use in the Indian stock market. To begin trading, you will need a broker, but you will not require a DEMAT account in order to do so. In the foreign exchange market, we can only deal in the futures and options segments.

    Forex trading in India has shown an upward trend with the introduction of futures derivatives. Individuals and investors were previously only able to trade with banks and major corporations before this change. Both banks and enterprises were given greater freedom to store and trade foreign currencies as a result of India’s currency liberalisation. Derivative products were necessary as trading laws were loosened to facilitate the integration of global and local economies.

    What is the rationale for using derivatives to manage risk?

    As with other financial instruments, the value of a currency fluctuates widely in response to changes in the broader economy and politics. Inflation, foreign commerce, and interest rates are all critical, but the most critical is political stability. Governments can influence the value of their currencies by intervening in the foreign exchange market through the actions of their central banks. They either flood the market with their own currency to reduce the price or buy to raise the price in order to make a statement. The currency trading market in India can also become unstable due to large orders by large firms. Foreign exchange supply is increased when a country’s exports rise. Additionally, market participants’ expectations of national economic performance and their faith in the economy of their respective countries also play a role.

    Currency trading in India could be severely disrupted as a result of these operations. For a long time, any one entity can’t control India’s currency trading market because of its enormous size and volume.

    Because of their enhanced transparency, liquidity, counter-party assurance, and accessibility, exchange-traded currency futures are an ideal hedging instrument.

    Due to its size, volume, and frequency of trade, currency trading in India is a substantial contributor to the national economy. As businesses of all sizes make up the majority of the economy, everything that helps them grows the national economy. Currency trading can be a rewarding endeavour if you keep abreast of global market developments.

    You can explore these options and more with Zebu. Our lowest brokerage fees allow you to purchase the index fund of your choice effortlessly, making yours one of the best trading accounts for currency trading.

  • Here’s How Arbitrage Trading Works

    Every day, thousands of traders and investors participate in the capital markets. All of the participants’ primary goal is to make a profit. To trade in the stock market, you can use a variety of techniques and strategies. A trading strategy, on the other hand, becomes applicable only if the asset’s price moves in a favourable direction. Arbitrage is a unique but simple method of profiting from the capital markets.

    Before we get into arbitrage trading… To do any form of trading, you need a reliable brokerage trading firm that gives you thebest stock trading platform that helps you analyse the right trading opportunities. Zebu gives you one of the best online trading platforms in the country with a fast-growing customer base. Please get in touch with us to know more.

    What exactly is arbitrage? To understand how arbitrage works, it is essential to first define arbitrage. Arbitrage is defined as the simultaneous purchase and sale of the same asset in different markets in order to profit from the price difference in both markets. While arbitrage opportunities can arise in any asset class that is traded in different markets in a standardised form, currency and stock markets are the most common. Arbitrage opportunities are frequently fleeting, lasting only seconds or minutes. Contrary to popular belief, markets are not completely efficient, creating arbitrage opportunities. As you may know, the price of an asset is determined by the supply and demand for it. A price difference arises as a result of a difference in supply and demand for an asset in different markets, which can be used for arbitrage trading.

    What is the process of arbitrage trading? As mentioned earlier, arbitrage trading is based on the trader’s ability to capitalise on the price gap of the same asset in different markets. Because arbitrage opportunities are limited, most traders use algorithms to execute arbitrage trades. Let us look at a stock market example to see how arbitrage works. Assume XYZ is a stock that is traded on the National Stock Exchange and the New York Stock Exchange. On the NYSE, the price of XYZ is quoted in US dollars, while on the NSE, it is quoted in Indian rupees. On the NYSE, the share price of XYZ is $4. The share price on the NSE is Rs 238. If the USD/INR exchange rate is Rs 60, the NYSE share price of XYZ in INR will be Rs 240. If the USD is converted to INR, the same stock is quoted at Rs 238 on the NSE and Rs 240 on the NYSE. To take advantage of the arbitrage opportunity, a trader will purchase XYZ shares on the NSE at Rs 238 per share and sell the same number of shares on the NYSE for Rs 240, earning a profit of Rs 2 per share. While participating in arbitrage trades, traders must consider certain risks. The price difference is the result of a favourable exchange rate, which is constantly changing. Any significant change in the exchange rate while the trade is being carried out can result in losses. The transaction fees are another important factor to consider. If the transaction cost exceeds Rs 2 per share, the price gain will be lost.

    In India, how does arbitrage work? There is a scarcity of companies that are listed on both the Indian and foreign stock exchanges. However, India has two major exchanges—the BSE and the NSE—and the majority of companies are listed on both, creating an opportunity for arbitrage. Even if the price of a particular share differs between the NSE and the BSE, an arbitrage trade cannot be conducted. On the same day, traders are not permitted to buy and sell the same stock on different exchanges. For example, if you buy XYZ shares on the NSE today, you cannot sell them on the BSE the same day. So, how exactly does arbitrage work? One can sell shares that he or she already owns on one exchange and buy the same amount on another. For example, if you already own XYZ shares, you can sell them on the BSE and purchase them on the NSE. If you already own the stock, you are not engaging in an intraday trade on different exchanges, which is not permitted.

    Conclusion Because the price differential does not last long, automated systems are commonly used for arbitrage trading. Though spotting arbitrage opportunities is simple, profiting from them manually is extremely difficult. As we mentioned earlier, arbitrage trading needs the best online trading platform for you to instantly capitalise on any price difference between NSE and BSE. Zebull from Zebu is the fastest growing and best stock trading platform that comes with a mind-boggling number of features to help traders. Zebu is also becoming the fastest-growing brokerage firm in the country – please get in touch with us to know more about our products and services.