Zebu blog

Tag: forex

  • 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.

  • 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.