Saturday, January 19, 2008


Role of currency fluctuations in financial markets like commodities, stocks, is increasing by each passing day. Some traders use this volatility or shall i say weakness/strength in important trade currencies like U.S.dollar, Yen, Euro to their advantage by taking aggressive long or short position in the underlying asset. This is causing huge volatility in stocks and commodities not to mention currency markets. Past few trading sessions saw huge yen carry trade unwinding due to continued U.S. dollar weakness against the japanese yen and thus resulting in volatile and weak stock markets. Central banks across the major developed economies must control movements or band in which they allow their currencies to fluctuate in order to restore calm in stocks and commodities, otherwise huge wealth is at stake.